In early 2024, retail executives signaled that consumers were becoming more particular about their purchases. They even minted a new word to describe this state of mind: Shoppers were more “choiceful,” as Walmart US CEO John Furner put it in an earnings call.
- For a while, this pickiness applied mostly to discretionary purchases, but then it became clear that shoppers were being more selective even when shopping for essentials.
This left retailers in a lurch, and how they responded became one of the defining features of the industry in 2024, which encompassed widespread price cuts, heavy promotional activity, and efforts to make their assortment more affordable.
Cut, cut, cut: To start, a number of retailers did their part to not only slow inflation but send it into reverse. In February, big box chains such as Walmart and Home Depot noted that deflation had started kicking in as far back as the fourth quarter of 2023, while also signaling that they were expecting more price normalization in the year to come.
This is exactly what played out in the consumer price index, which steadily declined throughout the year, in part because retailers weren’t sitting on the sidelines. They were actively cutting prices on thousands of items.
In the spring, Target announced that it was cutting prices on 5,000 “frequently shopped items across its assortment,” including essential grocery and household items. It then tacked on another 2,000 price cuts heading into the holiday season, this time with an emphasis on discretionary items as well such as toys and board games.
Walmart similarly committed to cutting prices, or “rollbacks” to use its terminology. The retail giant said it had implemented 6,000 rollbacks across categories in Q3, following 7,200 rollbacks in Q2. Smaller chains such as Michael’s employed a similar strategy with similar overall numbers, cutting prices up to 40% on 5,000 items.
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Getting closer to the holiday, retailers such as Aldi even made their fights against inflation an explicit aspect of their marketing, promising “inflation-busting” deals on Thanksgiving meals.
The strategy reflected a shift in priorities among retailers, as they tried to grow their sales volumes rather than take profit from higher prices, as some had done after the height of the pandemic when inflation first accelerated.
Endless promotions: In addition to permanent price cuts, retailers offered a steady clip of discounts this year. Amazon’s July Prime Day event in particular spurred a series of multi-day sales events at its big box competitors such as Walmart and Target. The two-day event raked in $14.2 billion, which was up 11% from the year before. The summer sales event also accelerated and moved up the back-to-school season, turning the summer into a key sales season ahead of the holidays.
Executives this year saw competitive discounts as a way to draw customers in an environment where loyalty was at an all-time low.
Cheaper stuff: But cutting prices, either permanently or for a deal day, was just one tool for bringing back inflation-weary customers. Retailers also reshuffled their assortments to bring in more affordable product options. Target notably continued to promote its affordable toy selection, even encouraging manufacturers to produce cheaper toys.
JCPenney similarly made changes to its assortment aimed at affordability. The department store said it was prioritizing its private-label brands and working closely with suppliers to produce items at a lower cost, which was helping it offer cheaper options throughout the year.
Discounters jumped on this bandwagon as well. On one end of the spectrum, Dollar General took steps to radically simplify its offerings, shedding hundreds of SKUs. On the other end, Big Lots expanded its assortment by expanding its relationship with foreign manufacturers.