Target slashes prices to keep pace with competition

By Pouyan Broukhim

Target’s shares have dropped significantly, trading as much as 4.7% lower than they were previous to the announcement that it would be introducing thousands of cuts on everyday items sold in store.

For any company, lowering prices threatens gross margins, something that resulted in the drastic drop in the retailer’s share prices.

The source of the growing competition in the supermarket industry can largely be put down to Amazon, who immediately announced significant price reductions to Whole Foods’ range after buying the company out for $13.7bn in its latest acquisition.

As the ecommerce giant upended the books and electronics industries, food retailers are now battling to avoid a similar threat to their fates.

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"We want our guests to feel a sense of satisfaction every time they shop at Target," Mark Tritton, Target's Chief Merchandising Officer.

"Part of that is removing the guesswork to ensure they feel confident they're getting a great, low price every day.”

"We've spent months looking at our entire assortment, with a focus on offering the right price every day and simplifying our marketing... all while maintaining sales we know are meaningful to guests."

Target is not the first to announce price reductions in an attempt to match Amazon’s advances, with Wal-Mart and Kroger already having done so.

The company has also expanded its online presence to keep pace with competition, demonstrated by its online sales having jumped 32%, whilst also having announced its movement away from Amazon's cloud services in an attempt to stop funding a key rival.


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