Beyond Price Cuts: How Retailers Pivot With Strategic Growth Initiatives

With a slowing economy and many consumers getting squeezed by slower income growth coupled with higher inflation, retailers are feeling the pressure.
As many consumers become increasingly careful with their spending, they will gravitate towards cheaper goods and procrastinate on discretionary expenses, particularly large ticket items.

Instinctively, retailers could just lower their pricing to attract more business and keep growing their share. And, in fact, most retailers are lowering their price points to accommodate budget-conscious customers: Target announced that it is slashing prices on more than 1,500 popular items immediately, with another 5,000 products to follow soon. Other retailers such as Ikea and Aldi have also recently reduced prices to re-engage churning customers. Walmart has doubled down on its “rollback” initiatives.


However, we all know that just slashing prices is not the secret for long-term success: no retailer wins in a price death spiral to the bottom. Fortunately, these retailers are savvy and while searching for profitable and sustainable growth they exploit other levers too.

Which other growth strategies are retailers adopting? Here are four main levers, with examples:


  1. Customer Segmentation:
    With a strong foothold on lower income shoppers, and still being the largest retailer in the US, Walmart is feeling the pressure from other physical retailers, such as the Dollar Store, as well as online players (e.g., Amazon). Having found higher income customer brackets as the next area for share gain, Walmart has launched a new private brand called “Bettergoods”, focusing on trending items but with a higher quality. The hope is that the new product expansion will attract customers that would generally go to other stores, for example Costco with its Kirkland private brand, as well as provide more variety for existing customers thus improving loyalty.

  2. Product Segmentation:
    Responding to customer feedback, particularly those looking for value but at a lower price point, Target is launching a new value brand called “Dealworthy”, with roughly 400 curated items. This is a similar approach to the dollar stores as well as Amazon’s “Amazon Basics”. Given the large amount of shopper purchase history at Target’s fingertips, the company can run data analytics and focus on top demand items. The intent is to protect customer loyalty and minimize the need to shop for these products elsewhere.

  3. Customer Experience:
    Enticing customers to visit the stores is important for same-store metrics. As a result, Walmart has invested over $9Bn in the last couple of years, updating over 1,400 stores to improve the shopping experience. Target had already started this process prior to Walmart, with positive outcomes, prior to the current slowdown. In addition, most large retailers are improving their digital experience, to help customers find and order products more efficiently, thus increasing loyalty, particularly for those who pay an annual subscription (e.g., memberships at Costco, Amazon Prime, Sam’s Club and Walmart).

  4. Services:
    Walmart has heavily invested in the digital infrastructure and its delivery mechanism. About 20% of US deliveries slated for the same or next day arrived in under three hours, making it competitive against Instacart and Amazon.
    Also, under the umbrella of “convenience”, Walmart is driving adoption of its own App, making it easier for customers to pick-up items from outside the store or have items delivered directly to the customer’s address. Lastly, both Amazon and Walmart are developing the next frontier of home delivery, through drones. Walmart has teamed up with Wing, Zipline and DroneUp and is already executing some deliveries in select (more remote) zip codes.



Which of these strategies could you apply for your business, instead of just lowering your pricing?

If you would like to brainstorm more options for your business, please reach out.

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