Grocery has been a consistent bright spot for Target, even as inflation-pressed consumers have cut back on discretionary purchases.
But Target CEO Brian Cornell told CNBC on Thursday that shoppers at the Minneapolis-based retailer are starting to pull back—even on essential items.
“They’re buying less stuff, even within food and beverage,” Cornell said in an interview with CNBC’s Becky Quick. “Even in food and beverage categories, over the last few quarters, the units, the number of items they’re buying, has been declining. So, they’re even tightening up their spending in those categories.”
Target is slated to report its third-quarter earnings on Nov. 15.
In August, the retailer lowered its sales outlook for the remainder of the year after reporting its first quarterly drop in earnings in six years. Comparable-store sales fell 5.4% during the three months ended July 29, though food and beverage sales were up in the low single digits during the period, with particular strength in snacks, candy and beverages.
Cornell, in the interview, said Target has seen seven consecutive quarters of decreases in discretionary sales, both in dollars and units purchased. Regardless, though, he said shoppers continue to enjoy “seasonal moments.”
“Whether it’s Halloween or the summer moments, going back to Mother’s Day and Father’s Day, they’re still enjoying these moments and they keep looking for newness,” he said.
To that end, Target added more than 70 private-label food and beverage items for Halloween, as it looked to offer a wide range of store and national brands that consumers couldn’t find elsewhere, most priced under $5.
And for Thanksgiving, Target just launched a meal for four that costs less than $25, including turkey at under $1 per pound and an assortment of sides and desserts for $5 or less. Most of the items on the menu come from Target’s Good & Gather store brand.
“We’ve been very committed to delivering value for our guests,” Rick Gomez, Target’s EVP and chief food and beverage officer, told WGB last month. “And what we recognize is right now—with inflation, with the economy—our guest is looking for affordability.”
Cornell told CNBC that seasonal sales will continue to be an area of focus for the company.
“We’re going to lean into those big seasonal moments and play to win,” he said. “What we know is the consumer is looking for something that’s new, looking for affordability, looking for that special item for the holiday season.”