Inflation is biting into the tar-zay shine of the target

New York
CNN
—

Target has spent decades building its reputation for cheap, stylish home goods, clothing and other merchandise. But rising prices in recent years have dulled Tar Chai’s luster.

Sales at stores open at least one year fell 3.7% during the fourth quarter from last year, the company reported Wednesday. This was the fourth straight quarter of declining sales at Target (TGT). The company’s stock fell about 7% during pre-market trading.

Target said sales fell primarily in discretionary categories last quarter, continuing the trend during higher inflation as customers spend on necessary items but cut costs on things they don’t really need.

The goal is to lead in the spending habits of consumers and the retail sector as a whole. Target’s core middle-class customer base has been pressured by rising prices and has pulled away from discretionary goods such as home decor, electronics and non-essential clothing in favor of groceries and daily essentials.

Target also declined due to merchandise mix and higher prices compared to competitors like Walmart.

The chain stocks more non-essential merchandise than competitors like Walmart (And die) And Costco (it costs). More than half of Target’s merchandise is discretionary. Target in recent years has added more food and basics to its stores, but it still lags behind Walmart, which gets about half of its sales from grocery stores.

Walmart’s sales rose 3.8% last quarter.

Target is trying to lure shoppers back by lowering prices on some key items and adding its own brands.

Target cut prices on more than 1,500 popular products starting Monday, from butter to laundry detergent, as the retailer tries to attract inflation-wary shoppers turned off by higher prices.

The company also recently created a new brand called Dealworthy to compete with dollar stores and Walmart. The budget-friendly collection consists of 400 items, from phone chargers to disposable dishes to underwear.