The Associated Press reports that Target is lowering prices on thousands of items, even as it “is spending billions to remodel stores and strengthen its online business. It said Friday it will continue ‘to offer additional savings on the right products at the right times’.”
- KC's View:
Target certainly is in a better position to make a low price argument than Benny’s, which I wrote about above. But I still think that in the end, price will be less important to Target’s resuscitation than value and a strong customer experience.
Target’s problem is that when it makes moves like these, it often is punished by analysts and the stock market, which creates all sorts of other pressures.
I also noticed that in the Reuters story, Target said that it “spent months reassessing the prices of everyday items such as milk, eggs, razors and bath tissue.” Maybe I’m wrong, but it occurs to me that spending months on reassessing prices is way too long, especially since the items mentioned are largely commodity products carried by everybody. You can’t make a real difference in customers’ lives by focusing on the items that you have in common with the competition … you have to focus on where you are different.
That’s not to suggest that a competitive price on milk, eggs and toilet paper isn’t important. But it’s the price of entry, not a differential advantage.