Target CEO: Stressed Consumers Trim Grocery Budgets

Target CEO Brian Cornell said the strain consumers are feeling has finally begun to impact grocery sales.

Cornell said in an interview with CNBC Thursday (Nov. 2) that his company has seen sales drop for several quarters for discretionary goods like clothing and toys.

“But even in food and beverage categories, over the last few quarters, the units, the number of items they’re buying, has been declining,” he said, per the report.

CNBC characterized these comments as Target doubling down on a cautious outlook ahead of the holiday shopping season.

And while many economists are now walking back predictions of a recession and Federal Reserve data shows inflation waning, Target has nonetheless lowered its full-year sales/profit forecast, according to the report.

Cornell told CNBC the retailer is taking a more conservative tact with its inventory for the holidays after seeing shortages during the pandemic and being saddled with a glut of the wrong inventory in 2022.

“But we’re going to lean into those big seasonal moments and play to win when we know the consumer is looking for something that’s new, looking for affordability, looking for that special item for the holiday season,” he added.

Meanwhile, consumers might be paying for that special holiday item using installment plans. PYMNTS Intelligence found that 41% of shoppers plan to rely more heavily on these plans for their holiday purchases this year.

“Against this backdrop, merchants can boost their bottom lines by offering multiple plan options this holiday season,” PYMNTS wrote Thursday. “As noted in the report, 22% of shoppers would be very or extremely likely to switch from a merchant that does not provide installment plan options using their existing credit cards to one that does. Additionally, 54% would be at least somewhat likely to make the switch.”

Last month saw another big retailer, Walmart, double down on its strategy of holiday grocery deals to take advantage of this high-stress season, announcing “even bigger” deals on Thanksgiving meals and other holiday food items.

“Specifically, it is once again ‘removing inflation’ from popular brands’ Thanksgiving meal products, offering two meals for the holiday at lower prices than last year — one for those cooking it themselves and another ready-to-bake alternative,” PYMNTS wrote Oct. 20. “The company’s pricing initiatives span items such as turkey, ham, stuffing and pumpkin pie, among others.”

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