There is a quickly growing trend among some of the largest grocery sellers in the US. Target (NYSE: TGT) cuts prices on thousands of items sold at its stores, including groceries. At the same time, Walmart (NYSE: WMT) said it would slash prices on nearly 7,000 items, many of which are in the grocery category. Walmart is the largest grocery retailer in America. Not to be outdone, Amazon (NASDAQ: AMZN) also cuts grocery prices. It has far fewer stores than its bricks and mortar competitors. People who thought Amazon would crush Walmart were wrong.
According to CNN, Amazon’s grocery cuts include thousands of products. The decision is likely meant to hang onto market share. However, another incentive for the huge e-commerce company is that grocery prices are so high that Americans have cut back on shopping altogether. Prices are up over 20% since the start of the pandemic, based on data collected by the Federal Bank of St Louis.
Americans will likely cheer the cuts at these huge retailers. Research firm DriveServe polled people who shop for groceries regularly. Over half said they expect to pay more for groceries in 2024 than in 2023.
The largest retailers control the grocery markets. Research from the USDA found that “About 89 percent of households do their primary grocery shopping at supermarkets or supercenters.” Lower prices allow Walmart, Target, and Amazon to maintain that trend.
One aspect of lowering prices may also be in place. Retailers might assume that people who come into stores to buy groceries may also purchase other items. If this is the case, Amazon, Walmart, and Target could find that their total sales will rise as falling grocery prices bring people to their stores.
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