By Sabrina Escobar
Retailers are trying harder to offer value for money as they seek to attract budget-conscious shoppers ahead of the holidays.
Lowering prices on Thanksgiving dinners and everyday groceries is the latest tactic in a heated battle for consumer dollars. Analysts say that can help retailers maintain and increase market share in a competitive field, but that it also can mean narrower margins when tariffs are already reducing profitability. Wall Street forecasts have yet to reflect that risk.
Target is the latest to unveil a move. It said Tuesday it was lowering prices on 3,000 food, beverage, and essential items to help shoppers save. The price reductions are designed to "make everyday shopping more affordable through the holiday season," Target said.
The price reductions add to Target's continuing efforts to market itself as a value-first retailer when consumer budgets are strained. Last week, the company said its holiday meal for four people was returning at its "lowest price ever," retailing at under $20, or less than $5 per person. The meal includes a frozen turkey, potatoes, cranberry sauce, stuffing mix, gravy, bread, and frozen corn.
Walmart has its own Thanksgiving meal deal, which retails for less than $40 and includes 20 items, such as a turkey, stuffing, potatoes, carrots, gravy, pie crusts, and more. The meal serves 10 people, putting the per-person cost at just under $4, Walmart said.
Kroger and German grocer Aldi are also offering Thanksgiving bundles priced between $4 and $5 per person.
Although holiday spending is projected to grow at a healthy clip this year, most forecasters warn that years of inflation have made shoppers -- particularly those in lower-income households -- more price sensitive. The National Retail Federation notes that consumers will be looking for deals, and may be considering cutting their day-to-day spending to be able to afford gifts.
The government shutdown may have given retailers an additional reason to act. Food aid under the Supplemental Nutrition Assistance Program has been delayed in certain states, making it hard for some families to buy groceries. More than a million federal workers haven't received a paycheck in the more than 40 days of the shutdown.
While the Senate passed a stopgap funding bill to reopen the government Monday, it still has to be voted on in the House. Both SNAP and pay for federal workers may face more delays as agencies reboot, meaning that consumers are likely to remain under pressure.
Those challenges, plus Wall Street's tendency to reward chains that offer value, mean price cuts make sense for retailers looking to protect both their market-share gains and top-line growth. But that could come at a cost.
Retailers often absorb the cost of rolling back prices, which eats away at their bottom line. And as Oppenheimer analyst Rupesh Parikh notes, if consumers don't have much money, they are less likely to buy higher-margin discretionary items, such as home goods, appliances, and beauty products.
"We would expect WMT's grocery business to be resilient even with potential SNAP impacts, but believe you could see a potential headwind to higher margin discretionary spend as consumers prioritize their wallets," he wrote in a research note Monday.
Yet despite the concerns over how price cuts could affect earnings, analysts have yet to significantly change their forecasts for profits. Wall Street is predicting that Walmart will report adjusted earnings of $2.61 for the fiscal year ending January, unchanged since August.
The consensus call for Target's annual earnings is for $7.27 a share, slightly lower than last week's projection for $7.28 a share, according to FactSet. Expectations for Kroger's earnings per share have remained at $4.79 a share since mid-October.
Most big-box retailers are preparing to report fiscal third-quarter earnings next week. Investors will be paying attention to what management teams say about how consumers have reacted to the latest economic challenges, and how that could affect holiday spending.
Write to Sabrina Escobar at sabrina.escobar@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
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November 11, 2025 12:28 ET (17:28 GMT)
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