You may be cutting back on nice-to-have purchases in order to save money. But everyone’s got to eat. So Walmart and Target are competing with your local supermarket – and each other – to become your new favorite grocery store.

And a good product selection, the freshness of their offerings, and a pleasant shopping experience are only part of the equation. Whether you prefer your local grocery store, or Walmart, or Target, depends in part on whether you like saving money by clipping coupons and scouring your grocery store’s weekly sales circular, whether you prefer Walmart’s everyday low prices, or whether you are drawn in by Target’s increasing emphasis on personalized promotions.

Walmart reported strong quarterly earnings this morning, due in large part to gains in grocery sales. With prices going up for nice-to-have items like new clothes, furniture and electronics, as well as for must-have items like food – shoppers are cutting back on the former and devoting more of their spending to the latter.

“As consumers have less purchasing power, less buying power, we’re seeing more of their income, their wallets being devoted towards food, and less towards general merchandise,” Walmart Chief Financial Officer John David Rainey told Reuters.

In a presentation to investors, Walmart emphasized its “strength in food categories (and) private brand sales,” along with an overall “shift from general merchandise to grocery and health & wellness” as inflation-weary shoppers focus on the essentials.

“Customers continue to seek value given the impact of inflation,” Walmart CEO Doug McMillon said. “We all need those prices to come down.”


As Walmart emphasizes its everyday low prices, Target is taking a more… targeted approach to attracting deal-seeking shoppers.

While groceries account for more than half of Walmart’s revenues, they make up just about a fifth of Target’s. And with fewer shoppers buying the discretionary items for which Target is better known, Target is trying to push shoppers to make more everyday grocery purchases there, as a way to boost overall sales.

“When I arrived at Target just under nine years ago, our food and beverage category was underperforming and losing market share,” Target CEO Brian Cornell told investors yesterday. “I know Target sells food and beverage,” Chief Food and Beverage Officer Rick Gomez quoted one shopper as saying once, in an interview with CNBC. “But it kind of feels like an afterthought. It feels a little bit like a bolt-on.” So “rather than turning away from that part of our business,” Cornell said, “we decided to lean in.”

As a result, just like Walmart has been experiencing, grocery sales have been increasing at Target, though the retailer still has a long way to go before grocery purchases have a material impact on total sales. So rather than rely on grocery sales alone, Target is hoping to draw shoppers in with groceries, then tempt them to leave with other unplanned purchases.

Target’s grocery department is “a gateway to the rest of the store,” Gomez said. While shoppers are “picking up what they need food- and beverage-wise, they’ll browse through the rest of the store and maybe pick up a few things” in other departments.

One of the ways Target hopes to draw in and retain shoppers, is with deals. Shoppers are “more price conscious and focused on promotions right now,” Chief Growth Officer Christina Hennington told investors. “We see incredible guest response to Target Circle promotions.” Target’s discount and loyalty program “offers personalized promotions. And we’ve seen that that is generating better returns than mass promotions.”

Competition for your grocery dollars is intensifying, whether it’s in the form of an everyday low prices approach of Walmart and rivals like dollar stores or ALDI, or a more promotional approach like Target or your local supermarket. And if more competition leads to more affordable groceries, then it’s the grocery shopper who may ultimately win.

Image source: Target

One Comment

  1. Send me all the coupons you can on food and other household items, and I’ll use them monthly.

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