The retailer announced Friday, Sept. 8, that it's cutting prices on "thousands of items, from cereal and paper towels to baby formula, razors, bath tissue and more." The price cuts come just a few weeks after Amazon completed its $13.7 billion acquisition of Whole Foods and slashed prices at the organic grocer famously nicknamed Whole Paycheck.
Target said in a statement that it's cutting down on promotions, eliminating "more than two-thirds of our price and offer call-outs," including "all those little signs and ads letting you know about the 'Weekly Wow!' or 'Bonus Offer.'" The company isn't "ditching promotions" altogether, but instead "just making sure to offer only our best, most compelling sales-when it makes the most sense for our guests.
Target's goal is "removing the guesswork to ensure they feel confident they're getting a great, low price every day," chief merchandising officer Mark Tritton said in a statement, adding that Target is "focus[ed] on offering the right price every day and simplifying our marketing to make great, low prices easy to spot, all while maintaining sales we know are meaningful to guests."
Investors pounced on this sign of weakness, and Target shares fell 3% to $56.67 in midday trading Wednesday.
Also feeling the heat is Kroger Co. (KO - Get Report) , which reported earnings Friday. Second-quarter profits fell 7.8% as the country's largest grocer aggressively discounted to compete with Whole Foods and Walmart Stores Inc. (WMT - Get Report) . CFO Mike Schlotman reassured investors that "our customers aren't abandoning us" and that there are no plans to close stores.
Walmart itself has been cutting prices on staples, putting pressure on rivals like Target, Dollar Tree (DLTR - Get Report) and Dollar General Corp. (DG - Get Report) . Dollar General shares also dropped after Target's announcement, down 2.2% to $74.66. Walmart fell 2.2% to $78.33.
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Editors' pick: Originally published Sept. 8.