Walmart, Target and Amazon Are Spending Billions to Reset the Shopper’s Reference Price

Years of inflation, promotions, personalized discounts and constantly shifting online prices have made shoppers better at finding deals. They have also made it harder for shoppers to know what anything is supposed to truly cost, a fact that is being sharpened against a backdrop of weakening shopper confidence and a globally softening macro environment.

That, in turn, is making today’s emerging retail battle less about who has the lowest price today and more about who gets to establish the price consumers regard as normal tomorrow. After all, in many ways, retail spent the past decade systematically undermining the very idea of a normal price.

Black Friday became Black November. Amazon turned Prime Day into a major retail season, competitors responded with their own events, loyalty programs introduced member-only pricing and retailers layered digital coupons and personalized promotions on top. The strategy worked so well that it created a new problem: consumers learned to wait.

Amazon moving Prime Day into June this year helped pull spending forward from July, illustrating how promotional events can move demand through the calendar rather than create it. The retail strategy against 2026’s operational backdrop isn’t one of cutting prices everywhere. As headlines this week from Target, Walmart, Amazon and other retailers show, it is figuring out which 100 prices determine what consumers think about the other 100,000.

See more: Amazon and Walmart Want to Beat the Consumer to Their Next Purchase 

The Great Retail Trade-Down Is Becoming Permanent

Consumers today have more price information than ever and potentially less confidence in the meaning of any individual price.

Walmart, for example, isn’t treating lower prices simply as a merchandising decision. It is effectively treating them as an investment. Milk, eggs, detergent, diapers, cereal and other frequently purchased products function as informal benchmarks. Shoppers know approximately what they should cost. Those products help consumers form an opinion about the affordability of thousands of other products whose prices they cannot track.

Walmart had more than 11,000 price rollbacks during the second quarter, compared with about 7,200 at the end of the first quarter. Target, which has lowered prices on more than 10,000 products over the past year, says it will continue to “invest in price.” TJX is also planning to use a projected tariff refund to offset merchandise costs, limiting the pressure to push those costs onto shoppers.

“Customers tell us they’re still feeling some pressure,” Walmart CEO John Furner said on the company’s Thursday (Aug. 20) earnings call. “But it’s clear customers are looking for value and convenience, and they want things fast.”

“Your shoppers don’t necessarily buy more food because they see lower prices,” Furner added during the call. “But over time, what we’re trying to do with rollbacks and low prices is build trust with customers.”

See more: Walmart Sees Mid-Single-Digit Grocery Growth as Shoppers Prioritize Affordability 

Consumers have not stopped spending, but household budgets remain strained enough that relatively small differences in everyday expenses can influence where they shop. The most valuable price cut may not be the one that generates the largest incremental unit sales. It may be the one consumers remember.

Retail has traditionally equated value with discounting. But after several years of volatile prices, consumers may value something adjacent to cheapness: certainty. The retailer that wins this phase of the consumer economy may not be the one offering the deepest discounts. It may be the one that convinces shoppers to stop looking for them.

That distinction matters most in high-frequency categories. Households planning grocery budgets don’t merely care whether milk is inexpensive today. They care whether roughly the same basket will still fit inside the household budget next week.

Data in the August PYMNTS Intelligence Data Book, “Five Ways Consumers Make Tight Budgets Work Harder,” found that 53% of paycheck-to-paycheck consumers struggling to pay bills had cut spending on nonessentials such as dining out, entertainment and travel during the previous year.

See also: Amazon Wants Alexa to Look Inside the Fridge and Fill the Cart 

When Everyone Is Discounting, Off-Price Has to Sell Something Else

The proliferation of markdowns should theoretically erode the distinctiveness of the off-price proposition. Instead, it may reveal what consumers were buying from retailers like T.J. Maxx all along: the possibility of finding something.

That is a different psychological proposition. Walmart can promise that detergent will still be inexpensive next week. T.J. Maxx can promise almost the opposite: the designer jacket might not be there tomorrow. As conventional discounts become ubiquitous, off-price retailers may instead depend on discovery, scarcity and assortment rather than the numerical size of the markdown, where the treasure hunt becomes the product.

At the same time, Target’s own private-label expansion attacks the price problem from yet another direction. Food and beverage sales rose 7% last quarter, and Target plans to add roughly 600 private-label food products, including 400 under Good & Gather.

Private label is normally explained through margin. Retailers control more of the economics and avoid sharing some of the value with national brands. But proprietary merchandise has another advantage in an era of radical price transparency, in that there is nothing identical to compare it with.

Search for a nationally branded detergent and a shopper can compare Walmart, Target, Amazon and supermarket prices within seconds. Search for a proprietary Good & Gather product and the comparison becomes subjective. It could represent a key growth strategy as digital commerce continues commoditizing products that can be compared on price.

The same logic applies beyond grocery. Exclusive brands, limited collaborations and retailer-owned products create merchandise whose worth cannot be reduced to a browser tab showing five competing prices.

As search becomes easier, retailers have greater incentive to sell merchandise for which there is no clean comparison at all.

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