Butterball Battle Begins for Retailers Rolling Out Holiday Deals

Retailers duking it out over shoppers’ shrinking budgets are offering a flurry of holiday deals amid stubborn inflation and volatile tariffs. 

Target said this week it’ll slash prices on 3,000 items starting this month through December. The bullseye-branded retailer said this week it’ll shave cents and dollars off the sticker prices of holiday staples like pie crusts, apples and hickory-smoked hams. And for the aftermath of serving as a human jungle gym for little nephews and nieces, there will also be discounts on cold and flu meds. Walmart, meanwhile, quietly rolled out 7,400 price cuts in the summer quarter, 2,000 more than during the same time last year. 

With Thanksgiving around the corner, retailers are fighting turkey to turkey: Target said its meal kit for four will cost less than $20 this year before tax, or about $5 a person. Kroger and Aldi’s bundles are similarly priced, while Walmart’s, which includes more than double the feast, rings in at about $40. 

Down on Your Potluck

Shoppers are still expected to spend a sizable sum this holiday season, with the National Retail Federation predicting that total spending will increase by about 4% over last year to more than $1 trillion. Deloitte predicts spending will reach as high as $1.6 trillion as consumers refuse to let economic malaise hinder their holidays. 

However, analysts and retailers are heading into the season with caution as shoppers are expected to seek out deals to stretch their budgets as much as they can:

• Nearly nine in ten consumers told Numerator they’re worried about how tariffs will affect their finances, with 82% saying they plan to change the way they shop in reaction to the policies. So they’ll be skipping nonessentials, searching for coupons to clip and trading down to discount stores. Consumers could have more to spend than they expected, though: Treasury Secretary Scott Bessent said yesterday that he expects the US to lower tariffs on everyday staples like coffee and bananas sometime this week.  
• At the same time, lapsed SNAP benefits could make lower-income consumers come up short on their food-shopping budgets. Walmart’s CEO has noted that lower-income shoppers are becoming more selective in their spending. 

The Rest Isn’t Gravy: Cutting the price of Kraft Mac & Cheese can attract shoppers in the short term, but it could also erode future profitability as retailers absorb the cost of deals. And while holiday revelers may prioritize having a feast, analysts warn they could pull back spending on discretionary gifts like appliances and home goods, items with higher margins than boxed mashed potatoes. As retailers battle over Butterballs and PlayStation 5s, investors will be looking for their updated holiday predictions when Target and Walmart report earnings next week.