Walgreens announces price cuts on 1,300 items amid ongoing consumer spending fatigue

The pharmacy chain said in a statement announcing a ‘summer of savings’ that the lower prices were in response to consumers’ ongoing struggles with elevated inflation rates that continue to bedevil the U.S. economy.

“Walgreens understands our customers are under financial strain and struggle to purchase everyday essentials,’ said Chief Customer Officer Tracey D. Brown, Walgreens’ president of retail. ‘We continue to be committed to our customers by lowering prices on over a thousand additional items, something we’ve been doing since October of 2023.’

Walgreens previously pointed to a ‘challenging’ retail environment when it announced its quarterly earnings in March.

Among the price cuts the company highlighted:

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Walgreens’ announcement follows others by retail giants that also indicate greater awareness of consumers’ price sensitivities. Last week, Target announced lower costs for thousands of items in its stores , while Walmart recently unveiled an entire new line of food items costing $5 or less.

The post-pandemic economic recovery is showing signs of splitting into a ‘K’-shaped one, with more well-off people able to sustain consistent levels of spending, even amid inflation rates that continue to hover above 3%. Lower-income consumers have been cutting back more substantially.

In its monthly consumer confidence report, released Tuesday, the Conference Board business group said those making over $100,000 per year expressed the largest rise in confidence, higher overall than that of lower-income groups.

“The lower-income consumer in the U.S. is stretched … [and] is strategizing a lot to make their budgets get to the end of the month,” PepsiCo CEO Ramon Laguarta told analysts on the company’s conference call last month.

Meanwhile, other areas of the economy more closely tied to wealthier consumers continue to outperform, especially travel. Even as American Airlines announced Wednesday it was cutting growth plans, analysts said the changes did not reflect a broader pullback.

“American’s diminished [outlook] speaks far more to its flawed initial forecast than any broad-based shift in passenger demand,” JPMorgan airline analyst Jamie Baker said in a note about the airline Wednesday.