The Relatable Reason Target Customers Are Buying Less Than They Normally Would
While it's fun to wander through Target, Starbucks in hand, and search for dozens of exciting new finds, it's becoming harder and harder to justify spending the extra money. If you've recently cut back on your trips to Target (or at least lowered your weekly bill), you're not alone.
Target recently released its 2022 first-quarter financial report, and some of its metrics were lower than Wall Street's predictions, according to Yahoo Finance. Target's unexpectedly low performance was due to two major issues that popped up this year: a significant increase in transportation costs (especially in the middle of supply chain issues and record-high gas prices) and strained customer budgets that led to a lower than expected increase in sales. Surprisingly, Target saw its customer traffic grow more than its sales (via Yahoo Finance). In other words, even though more people are shopping at Target, each person is buying less than usual.
Gas prices set budgets on fire
Ironically, Target and its customers are both struggling with the same issue: runaway gas prices that don't show any signs of slowing down says USA Today. While this directly puts a dent in Target's profits since they have increased shipping costs, it also strains customer budgets. As of March 2022, 64% of Americans were living paycheck to paycheck, according to CNBC. With such a high cost of living, fun shopping sprees are out of reach for more and more Americans — although Target's dollar section might become more appealing.
Ultimately though, Target's profits are relatively safe. While it's fun to look around Target for exciting new indulgences, their wide variety of groceries and other essentials make them more likely to remain a staple store as customers cut down on expenses. They've even told investors that they expect to see a slight sales growth in 2022 (via Yahoo Finance), so you don't need to worry about the retail giant shutting down anytime soon.