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Earlier this week, we attended the National Restaurant Association show in Chicago and had the chance to speak with a wide range of restaurant owner/operators (large chains, small chains, independents, and franchisees) as well as their vendors, distributors, and other technology solutions. We’ve already seen some great recaps of the event (including one from Nation’s Restaurant News), but we thought we’d offer some of our own observations from the event.
Fierce Fight for Visits Amid New Sources of Competition
We discussed this during our trade show preview last week, but concerns about slowing foot traffic trends and increased competition with alternative food retail channels like grocery, dollar stores, and convenience stores was easily the number one topic of discussion at the event. Most operators we spoke with acknowledged flat or year-over-year declines in comparable visits, which is consistent with the year-to-date on most of the restaurant subcategories we monitor (below)
Most of the restaurant executives we spoke to at the event also noted the improvements of prepared food offerings in the grocery and c-store channels as a competitive headwind. One executive even told us that “C-stores have gone from copying QSR category innovations to setting the bar higher in many ways.” We’ve seen this in the channel shift taking place across the food retail category, which we touched upon last week.
As it pertains to competition in the months ahead, operators across all categories admitted that they were curious about the ripple effect of McDonald’s plans to launch a $5 value menu on June 25 (which will run for a month). We’re already starting to see competitors try to front-run McDonald’s $5 value menu, and there will likely be others who introduce similar promotions in the coming weeks. While these offers are likely to help QSR chains recapture some of the visits lost to other channels, these chains will likely need to continue with their value messaging in the back half of the year (especially with the rollbacks taking place at Walmart, Target, and other superstore chains) while also committing to more menu innovation than we’ve seen year-to-date.
Coffee’s Momentum Continues–With A Notable Outlier
One of the two subcategories that is seeing year-over-year increases is coffee. Some of this growth has been fueled by expansion plans of Dutch Bros, 7 Brew Coffee, 151 Coffee, Scooter’s Coffee, Philz Coffee, particularly in the South and Southeast U.S. (something we touched on late last year). Below, we’ve put together a custom chain of drive-thru focused chains versus the category average to put some context behind where the growth in the category is coming from (although the category itself as a whole continues to see healthy growth).
Starbucks–which reported a 7% decline in comparable transactions during its January-March 2024 quarter–is one of the key outliers from this category. Starbucks CEO Laxman Narasimhan called the company’s performance “disappointing” on its most recent update call. There have been no shortage of opinions on why the chain has underperformed, but our data continues to indicate that occasional visitors are the root of the softer visitation trends, much like they were last quarter. To reverse these trends, the company has already launched flavored pearls for a series of summer seasonal drinks and an improved blueberry muffin. Additionally, the company plans to launch more sugar-free customization options (including syrups) as well as a zero-to-low-calorie energy beverage.
Casual Dining’s Quiet Comeback
The other restaurant category posting seeing year-over-year growth may come as a surprise: casual-dining chains. After a slow start to the year due to weather, the category has generally seen low-single-digit growth on a year-over-year basis (something Placer’s blog team pointed out a few weeks ago). Several executives in the casual dining space we spoke with noted that they had started to see improving trends, with a few citing a narrowing price gap with QSR/fast casual chains (in other words, if consumers are going to pay the same price per entree, they’ll gravitate toward casual dining) as well as a continued propensity to spend for events/holidays (a theme we touched on repeatedly in the past).
Where is the growth coming from? There are a couple of expected categories, including steakhouses, breakfast-first concepts, and eatertainment. Asian concepts have also performed well this year, helped by growth from experiential concepts like Kura Sushi and GEN Korean BBQ.
On the other end of the spectrum, we see weakness in Mexican and Seafood concepts. Seafood should not come as a surprise given that one of other notable development in the restaurant industry this week was Red Lobster’s bankruptcy announcement. The company's Endless Shrimp promotion has been widely blamed for the company's bankruptcy filing--and our visitation data does show a spike in visits coinciding with the promotion--but there were certainly other factors such as unfavorable lease terms that played a part.
It’s been nicknamed the “Superbowl for Dealmakers” and this year’s packed ICSC Las Vegas conference paved the way for tons of pipelines. All had comfy shoes on, phones ready to scan badges, and everyone was eager to learn and network.
Based on the buzz in the booths, it’s clear that dealmakers were happy to be able to meet face-to-face. High-demand retail locations are staying strong and able to command higher rents. However, there are also landlords in areas with less demand willing to negotiate and toss in reduced rent or concessions. With higher costs for construction and borrowing and limited supply in hot areas, both landlord and tenants are getting creative with solutions. Some are carving up vacant anchors for non-traditional tenants or experimenting with smaller footprints and more curated merchandise. Kroger is launching new concepts within the ethnic grocery space. Meanwhile others are taking advantage of large spaces to create experiential flagships, as we noted in the panel on “Shifting Store Formats” that Placer participated in, along with Kohl’s, CBRE, and Colliers. Other fascinating panels included understanding the impact of influencer marketing and innovations that are revolutionizing the shopping experience.
In a panel on “The Office - The Effect of Flexible Work Models on Foot Traffic,” a panel including Avison Young, CBRE, and Placer discussed how shoppers are shifting their times and locations for shopping, dining, fitness, and entertainment as a result of migration and varying remote and hybrid work schedules.
Over the course of the conference, one city kept popping up in conversation and that city was Miami. Whether it was cocktail party conversation, pub crawl chit chat, or booth banter, people kept lauding how this city barely missed a beat during COVID, new residents kept flocking in, its vibrant and cosmopolitan feel, and the opportunity for new concepts and store openings here. Let’s unpack some of the things happening in Miami.
Migration
Using Placer’s Migration Dashboard and honing on our Migration Draw tool, we see that Miami’s coastal areas are extremely attractive to residents.
Some of the factors that most affect Miami’s desirability include weather, being pedestrian-friendly, and superior access to restaurants and nightlife.
There are of course some trade-offs as well, such as higher housing costs and overall cost of living than many transplants’ original locales.
Nightlife
If you want to party in the city where the heat is on, Miami's the place for you. Taking a look at the time period of 6pm- midnight, nightlife visits in Miami outnumber those in East Williamsburg, Capitol Hill, or Deep Ellum.
Return to Office
In an interesting twist, Miami also leads in having the highest rate of return-to-office. How do they manage to do that if they’ve been out partying? It’s likely a work hard/play harder mentality. Or, like many at ICSC mentioned, Miami never really closed down as much as other cities during Covid, hence there is less to recover from. Placer's Office Dashboard notes that Miami is in the lead with the highest recovery rate.
Shopping and Entertainment
For those who love all things retail, there are plenty of shopping centers and shopping areas to choose from. Brickell City Centre has seen some of the largest year-over-year increases. Meanwhile, Aventura’s April visits are up considerably compared to last year. The Miami Design District, which the Anchor has written about previously, has also been showing consistent year-over-year growth this year.
DICK’S Sporting Goods is one of the best-known names in the sportswear and sporting goods retail segment, with more than 700 stores across the country. The company, which also operates several smaller banners including its interactive House of Sport, has thrived in recent years, buoyed by a continued interest in health and wellness.
How is the chain faring into 2024? We took a look at the latest location intelligence to find out.
DICK'S was a major pandemic-era winner, sustaining visit gains through 2021 and 2022 and into early 2023. And though YoY visits slowed as 2023 wore on, DICK’s ended last year in a strong position, reporting the largest sales quarter of its history in Q4 2023.
And in early 2024, DICK’s largely held on to its gains. Like many retailers, DICK’S saw YoY foot traffic fall in January, as unusually cold and stormy weather kept many shoppers at home. But in February and March, the chain’s YoY visit gap narrowed considerably, with foot traffic hovering just under 2023 levels – no small feat for a discretionary chain in an environment marked by stubbornly elevated prices and flagging consumer confidence.
During most analyzed months, DICK’S outperformed both traditional Apparel and Sportswear & Athleisure retailers. And though the chain saw monthly YoY foot traffic drop once again in April, an analysis of weekly data shows that it entered May on an upswing.
Indeed, zooming into weekly visits to DICK’S shows that only during the week of April 8th, 2024 did the chain experience a large visit gap. And visits to the sportswear company began to trend upward towards the end of April and beginning of May – with YoY visits growing by 1.9% during the week of April 29th, and by 0.7% in the week of May 6th. The company also outperformed the Apparel and Sportswear segments in all but one of the analyzed weeks – Sportswear retailers had a slightly stronger showing than DICK’S did for the week of April 22.
Experiential retail has emerged as a significant success story in recent years, and DICK’S has enthusiastically embraced the trend. In 2021, the company introduced its House Of Sport concept, offering visitors the opportunity to browse athletic gear or try their hand at a climbing wall or a batting cage.
The concept quickly gained traction, expanding to fourteen locations, with several more slated to open in 2024 alone. And an analysis of visitation patterns at DICK’S House Of Sport locations shows why the model is such a powerful one.
In Q1 2024, YoY visits to the three original House of Sport locations in Victor, NY, Minnetonka, MN, and Knoxville TN – the only ones operational at the start of 2023 – increased by 4.8%. So as DICK’S continues to expand its portfolio of House of Sport locations, existing ones are also drawing bigger crowds.
The original House of Sport locations also drew more extended visits in Q1 2024 than other DICK’s locations – with a remarkable 40.7% of visits lasting more than 30 minutes. With the success of House of Sport under its belt, DICK’S has begun further diversifying its fleet with a new store format that brings an interactive retail experience to the chain’s traditional store type.
DICK’S continues to outperform the wider Apparel and Sportswear retail segments, and its expanding House of Sport concept is meeting healthy and growing demand. As the company continues to lean into its experiential offerings, will the chain’s positive momentum accelerate further?
Visit placer.ai for the latest data-driven retail insights.
As cars get more expensive, demand for repairs rises – and auto part chains are reaping the benefits. We analyzed the visit data for four leading auto part chains – AutoZone, O'Reilly Auto Parts, NAPA Auto Parts and Advance Auto Parts – and dove into O’Reilly Auto Parts’ recent growth to understand what may be driving success in this flourishing segment.
Auto parts chains are having a moment. With vehicle prices significantly higher than before COVID, many consumers would rather fix their cars than purchase new ones. At the same time, inflation has begun to subside, leaving people with more room in their budgets for non-essential maintenance and repairs.
Following a drop in December 2023, YoY visits to AutoZone, O’Reilly Auto Parts, Advance Auto Parts, and NAPA Auto Parts began to pick up in January 2024 – despite unusually cold and stormy weather that left many consumers hunkered down at home. And between February and April, YoY visits to the four chains remained nearly uniformly elevated.
On a quarterly basis, O’Reilly Auto Parts saw the biggest YoY visit increase, despite lapping a strong 2023. The chain, which drew 32.1% of total visits to the four brands in Q1, saw quarterly YoY foot traffic increase by 5.1%. AutoZone, which received 40.1% of quarterly visits to the four chains, saw quarterly YoY visits increase by 3.5%. And Advance Auto Parts and NAPA Auto Parts both saw quarterly YoY visits increase by 1.7%.
One strategy that has likely helped O’Reilly Auto Parts stay ahead of the pack is its much-touted loyalty program, recently ranked by Newsweek as one of the best in the nation.
Location intelligence shows that since COVID, O’Reilly Auto Parts has seen a steady increase in the loyalty of its customer base. And in April 2024, O’Reilly Auto Parts boasted the most loyal customer base of the four analyzed chains – with 52.0% of visits made by individuals that frequented the chain at least twice during the month. But other auto chains, including AutoZone, also enjoyed significant shares of visits by repeat customers – showing that there’s plenty of room at the top in the auto parts space.
The auto parts industry is poised for success in 2024, with leading chains like O'Reilly Auto Parts, AutoZone, Advance Auto Parts, and NAPA Auto Parts demonstrating resilience and growth. How will these chains continue to perform as the year wears on?
Visit placer.ai to find out.
We looked at nationwide and regional visitation patterns for CAVA to understand how the fast-growing fast-casual chain is performing across its major markets.
CAVA – which operated a little over 300 locations by the end of 2023 – is growing rapidly, with plans to reach 1,000 locations by 2032. The chain has seen consistent year-over-year (YoY) visit growth in most of its major markets, with a 23.6% YoY overall increase in nationwide visits in Q1 2024 – in large part due to its ongoing expansion.
CAVA is headquartered in Washington, D.C., and currently, most of its venues are located in the mid-Atlantic and southeastern United States. But the chain also has a strong presence in Texas and California and operates restaurants in a handful of additional states. Recently, CAVA entered the Midwest with its first Chicago location – and has plans to extend its reach even further. So what do CAVA’s various markets have in common – and what sets them apart?
Nationwide, the median household income (HHI) in CAVA’s captured market trade area is higher than the US median HHI – and diving into the regional markets indicates that this trend persists across regional markets.
In most states with a major CAVA presence – including Texas, Virginia, California, North Carolina, Georgia, and Maryland – the median HHI in CAVA’s trade area is 11% to 24% higher than the statewide median. Even in Florida, where the chain’s trade area HHI is closest to the statewide median, households in CAVA’s captured market are still slightly more affluent than in Florida as a whole.
But while the chain seems to attract a similar demographic across states, diving into the hourly visitation patterns in CAVA’s various markets indicates that dining habits differ between regions.
In Texas, Georgia, Florida, and North Carolina, the share of 11:00 AM - 10:00 PM CAVA visits taking place during the lunchtime daypart (11:00 AM - 2:00 PM) ranges from 35.5% to 36.9% – at or above the nationwide average of 35.4%. But in Virginia and Maryland, and especially California, the lunchtime rush is more subdued. In these states, the afternoon and evening dayparts tend to be busier than in the other analyzed states – with California in particular seeing 35.7% of visits taking place between 6:00 PM and 10:00 PM.
Identifying similarities and differences between the visitor bases in CAVA’s various markets can help the company identify ideal locations, optimize staffing needs, and tailor promotional efforts as it continues to enter new markets and open additional restaurants in existing ones.
For more data-driven dining insights, visit placer.ai/blog.
How did Mother’s Day (May 12th, 2024) impact retail and dining foot traffic this year? We dove into the data to find out.
Urban legends notwithstanding, Mother’s Day wasn’t actually created by the greeting card industry. But the occasion hasn’t become known as the “Hallmark holiday” for nothing. Every year in the run-up to Mother’s Day, shoppers descend on the chain to purchase everything from cards to candy.
Most years, the day before Mother’s Day is Hallmark’s busiest day of the year, with Super Saturday (the Saturday before Christmas) a not-so-close second. In 2023, Mother’s Day was edged out by Super Saturday, which converged with Christmas Eve Eve to create a pre-holiday shopping bonanza for the ages.
And this year is shaping up to be no different: On May 11th, 2024 (the day before Mother’s Day), Hallmark experienced a major visit spike – leaving all other Saturdays, including the Saturday before Easter, in the dust.
But greeting card retailers like Hallmark aren’t the only ones to benefit from Mother’s Day. A look at foot traffic to major industries on May 11th, 2024 shows that retailers across segments – from Home Improvement chains to Superstores – enjoy substantial visit boosts on the day before Mother’s Day. (Recreational & Sporting Goods, not so much).
For Home Improvement, Department Stores, Hobbies, Gifts & Crafts, and Clothing, May 11th, 2024 was the busiest day of the year so far, while for Discount & Dollar Stores and Superstores it was superseded only by March 30th – the day before Easter.
While the day before Mother’s Day is an important retail milestone, Mother’s Day itself is an occasion for treating mom to a nice meal out. And though grabbing a bite at a fast food joint or fast-casual fave is lots of fun – it decidedly isn’t the Mother’s Day vibe. A special occasion calls for a splurge, and Mother’s Day is Full-Service Restaurants’ time to shine.
On May 12th, 2024, Quick-Service and Fast-Casual Restaurants received about the same number of visits as on an average Sunday this year. But Full-Service Restaurants saw visits skyrocket – outperforming an average Sunday by 49.6%.
And drilling down into the data for six of Mother’s Day’s busiest Full-Service Restaurant chains shows Olive Garden emerging as a major holiday winner – with 89.0% more visits on May 12th, 2024 than on an average Sunday this year. Olive Garden drew more visits this Mother’s Day than on any other day since the beginning of the year – with Valentine’s Day (February 14th, 2024) coming in a close second.
But the Italian-American cuisine giant certainly isn’t the only FSR to enjoy a substantial visit boost on the big day: Texas Roadhouse, Cracker Barrel General Store, Chili’s Grill & Bar, Applebee’s, and IHOP saw respective May 12th visit increases of 55.1%, 51.0%, 46.4%, 44.4%, and 29.3%, compared to an average Sunday.
Mother’s Day comes but once a year – and grateful offspring nationwide show their appreciation with gifts and celebratory meals, generating boons for businesses across categories.
With Father’s Day right around the corner, what kind of impact will Dad’s big day have on retail and restaurant visits? Will Recreational & Sporting Goods brands have their day in the sun?
For more data-driven retail and dining insights, follow placer.ai.
Convenience stores, or c-stores, have been one of the more exciting retail categories to watch over the past few years. The segment has undergone significant shifts, embracing more diverse offerings like fresh food and expanded dining options, while also exploring new markets and adapting to changing consumer needs. We looked at the recent foot traffic data to see what this category's successes reveal about the current state of brick-and-mortar retail.
Convenience stores are increasingly viewed not only as places to fuel up, but as affordable destinations for quick meals, snacks, and other necessities. And analyzing monthly visits to the category shows that it is continuing to benefit from its positioning as a stop for food, fuel, and in some cases, tourism.
Despite lapping a strong H1 2023, visits to the category either exceeded last year’s levels or held steady during all but one of the first eight months of 2024 – highlighting the segment’s ongoing strength. Only in January 2024 did C-stores see a slight YoY dip, likely reflecting a weather-induced exaggeration of the segment’s normal seasonality.
Indeed, examining monthly fluctuations in visits to c-stores (compared to a January 2021 baseline) shows that foot traffic to the category tends to peak in summer months – perhaps driven by summer road trips and vacations – and slow down significantly in winter. Given summer’s importance for convenience stores, the category’s August YoY visit bump is a particularly promising indication of c-stores’ robust positioning this year.
While some C-store chains, like 7-Eleven, have a nationwide presence, others are concentrated in specific areas of the country. But as the popularity of C-stores continues to grow, regional chains like Wawa, Buc-ee’s, and Sheetz are expanding into new territories, broadening their reach.
Wawa, a beloved brand with roots in Pennsylvania, has become synonymous with its fresh sandwiches, coffee, and a highly loyal customer base. Wawa has been a major player in the c-store space in recent years, with a revamped menu driving ever-stronger foot traffic to its Mid-Atlantic region stores. Between January and August 2024, YoY visits to the chain were mostly elevated. And the chain is now venturing into states like Florida – where its store count has grown significantly over the past few years – as well as Georgia and Alabama.
Meanwhile, Texas favorite Buc-ee’s, though known for its enormous stores and mind boggling array of dining options, has a relatively small footprint – but that might be changing. The chain, which also outpaced its already-strong 2023 performance this year, is opening locations in Arkansas and North Carolina, further building on its reputation as a destination for travelers. And Sheetz, another regional chain with a strong presence in Pennsylvania, is also expanding, with plans to open locations in Southern states like North Carolina and Tennessee.
This trend toward regional expansion offers significant opportunities for growth, not only by increasing store count, but also by reaching new consumer bases and target audiences. Customer behavior differs between markets – and by expanding into new areas, c-stores can tap into unique local visitation patterns.
One metric that highlights local differences in consumer behavior is dwell time, or the amount of time a customer spends inside a convenience store per visit. In some regions, visitors tend to move in and out quickly, while in others, customers linger for longer periods of time.
Analyzing convenience store dwell times by state highlights substantial differences in visitor behavior. During the first eight months of 2024, coastal states (with the exception of Oregon) tended to see shorter average dwell times (between 7.5 and 11.8 minutes). On the other hand, in states like Wyoming, Montana, and North Dakota, average dwell times ranged between 21.2 and 28.2 minutes.
Interestingly, the states with the longest dwell times also have some of the highest percentages of truck traffic on interstate highways – suggesting that these longer stops are perhaps made by long-haul truckers looking for a place to shower, relax, and grab a bite to eat.
Even as regional favorites expand their reach, nationwide classic 7-Eleven is taking steps to further cement its growing role as a prime grab-and-go food and beverage destination. And like other dining destinations, the chain relies on limited-time offers (LTOs) to fuel excitement – and visits.
One of the most iconic, and beloved c-store LTOs is 7-Eleven’s Slurpee Day, which falls each year on July 11th. The event, during which all 7-Eleven locations hand out free slurpees, tends to drive significant upticks in foot traffic – and this year was no exception. Visits to the convenience store jumped by a whopping 127.3% on July 11th, 2024 relative to the YTD daily visit average – proving that good deals will bring customers in the door.
The convenience store sector continues building on the impressive growth seen in 2023. As many chains double down on expanding both their regional presence and their offerings, will they continue to drive growth in the coming years?
Visit Placer.ai to keep up with the latest data-driven convenience store updates.
Grocery chains in the United States are increasingly investing in on-site healthcare clinics, transforming their stores into hubs for both food and wellness. While grocery stores have long featured pharmacies and some basic healthcare services like vaccinations, recent years have seen a shift towards more extensive healthcare offerings.
Today, many grocery stores offer a range of services – from primary and urgent care to dental and mental health care. In addition to providing an important community service, grocery-anchored healthcare clinics can boost foot traffic at chains, help health providers reach more patients, and allow shoppers to manage their health and home needs in one convenient trip.
This white paper examines the impact these in-store clinics have on grocery chain visitation patterns and trade area characteristics. Are shoppers more or less likely to make repeat visits to grocery stores with healthcare services? And how does the addition of a clinic affect the demographic profile of a grocery store’s captured market? The report examines these questions and more, offering insights for stakeholders across the grocery and healthcare industries.
Analyzing foot traffic to grocery stores with and without in-store clinics shows the positive impact of these services: Across chains, locations with on-site healthcare offerings drew more visits in H1 2024 than their chain-wide averages.
The Kroger Co., which operates numerous regional banners as well as its own eponymous chain, has been a leader in in-store healthcare services since the early aughts. The company introduced its in-store medical center, The Little Clinic in 2003 – and today operates over 225 Little Clinic locations across its Kroger banner, as well as regional chains Dillons, Jay C Food Stores, Fry’s, and King Soopers.
And in H1 2024, the eight Dillons locations with clinics saw, on average, 93.0% more visits per location than the chain’s banner-wide average. Jay C, which offers two in-store clinics, also saw visits to these venues outpace the H1 2024 banner-wide average by 92.9%. For both chains, relatively small overall footprints may contribute to their outsize visit differences: Indiana-focused Jay C operates just 22 locations, all in the Hoosier State, while Kansas-based Dillons has some 64 locations.
But similar patterns, if somewhat less pronounced, could be observed at Kroger (43.0%), Fry’s (19.2%), and King Soopers (16.5%) – as well as at H-E-B (14.5%), which boasts its own expanding network of in-store clinics.
Analyzing the trade areas of grocery stores with healthcare clinics shows that these services tend to draw more affluent visitors from within the stores’ trade areas.
For some chains, including King Soopers, H-E-B, and Jay C, the clinics are positioned to begin with in areas serving higher-income communities. The median household income (HHI) of King Soopers’ in-store clinic’s potential markets, for example, came in at $92.3K in H1 2024 – significantly above the chain’s overall potential market median HHI of $88.1K. Similarly, the potential markets of H-E-B and Jay C Food Stores with clinics had higher median HHIs than the chains’ overall averages.
And for all three chains, stores with clinics tended to attract visitors from captured markets with even higher median HHIs – showing that within these affluent communities, it is the more well-to-do customers that tend to frequent these venues. (A chain or store’s potential market is obtained by weighting each CBG in its trade area according to the size of the population – thus reflecting the general composition of the community it serves. A chain or store’s captured market, on the other hand, is obtained by weighting each CBG according to its share of visits to the business in question – and thus represents the population that actually visits it in practice.)
Other brands, including Fry’s, Kroger, and Dillons, have positioned clinics in stores with potential market median HHIs slightly below chain-wide averages. But within these markets, too, it is the more affluent consumers that are visiting these stores, pushing up the median HHI of their captured markets.
These patterns highlight that, for now, grocery store clinics tend to attract consumers on the upper ends of local income spectrums. This information can be utilized by healthcare professionals and grocery store owners to pinpoint neighborhoods that may be open to grocery-anchored clinics, or to take steps to increase penetration in other areas.
Supermarket giant Kroger is a major player in the world of grocery-anchored healthcare, offering visitors access to pharmacies, clinics, and telehealth options via its grocery stores. What impact has the company’s embrace of healthcare had on visits and loyalty?
An analysis of household compositions across the potential and captured markets of Kroger-owned stores with and without Little Clinic offerings suggests that families with children are extremely receptive to these services.
In H1 2024, Kroger, King Soopers, Fry’s, Jay C, and Dillons all featured captured markets with higher shares of STI: PopStats’ “Households With Children” segment than their potential ones – highlighting the chains’ appeal for families. But the share of parental households in those stores with Little Clinics jumped significantly higher for all five banners.
The share of families with children in King Soopers’ overall captured market stood at 28.3% in H1 2024, higher than the 27.2% in its potential one. But the households with children in the captured markets of King Soopers locations with Little Clinics was significantly higher – 30.6% – and similar patterns emerged at Jay C, Dillons, Kroger, and Fry’s.
This special draw is likely linked to the clinics' focus on family health services like physicals, nutrition plans, and vaccines. The convenience of being able to take care of healthcare, grocery shopping, and pharmacy needs all in one go makes these stores particularly attractive to parents. And this jump in foot traffic shows the strategic advantage of incorporating healthcare services into the retail environment.
Providing essential healthcare services at the supermarket can establish a grocery chain as a crucial part of a shopper's daily life, enhancing visitor loyalty, and helping nurture long-term customer relationships. Indeed, in-store clinics offer a unique opportunity for grocery providers to connect with customers on a level that extends beyond the transactional.
An analysis of several Kroger-branded locations in the Cincinnati metro area showcases the profound impact in-store clinics can have on customer loyalty. In H1 2024, stores with Little Clinics had significantly higher shares of repeat visitors – defined as those making six or more stops at the store during the analyzed period – than those without.
For instance, 36.4% of visitors to a Kroger Marketplace store with an in-store clinic in Harrison, Ohio, frequented the location at least six times during the first half of 2024. But over the same period, only 29.0% of visitors stopped by at least six times to a nearby Kroger location in Cleves, Ohio – just ten miles away. Similarly, 30.7% of visitors to the Beechmont Ave. Kroger Food & Drug location with a clinic visited at least six times in H1 2024, compared to 23.0% for the nearby Ohio Pike Kroger store.
This trend was consistent across the analyzed locations, with those offering in-store clinics attracting significantly higher shares of loyal visitors. These metrics support the value of offering additional services as a draw for frequent visitors, while also providing the clinics themselves with the visitor volume needed to operate profitably.
Texan grocery chain H-E-B is beloved across the state – and though the chain isn’t new to the healthcare scene, it has been doubling down on wellness. In 2022, H-E-B launched H-E-B Wellness, a healthcare platform that offers patrons a variety of medical services, including – as of today – some 12 primary care clinics, many of them inside stores.
H-E-B stores with primary care clinics are helping to cement the grocer’s role as a convenient one-stop for local residents – allowing them to drop in to a nearby location for both daily grocery needs and wellness care.
H-E-B has always placed a premium on community, stepping up to help local residents in times of need. And though the chain as a whole draws an overwhelming majority of its visitors from nearby areas, those with clinics do so even more effectively. In H1 2024, some 83.6% of visitors to H-E-B came from less than 10 miles away. But for locations with primary care clinics, this share increased to 88.0%.
This suggests that wellness services are particularly appealing to nearby residents, strengthening H-E-B’s connection with local consumers even further. And for a grocery store centered on community engagement, the integration of health services into its offerings is proving to be a winning strategy.
H-E-B has been steadily expanding its primary care offerings since it launched the Wellness concept, adding two primary clinics at locations in Cypress, TX and Katy, TX in June 2023. Following the opening of these clinics – which operate Mondays through Fridays – both locations saw marked increases in the share of “Urban Cliff Dwellers” in their weekday captured markets. This STI: Landscape segment group encompasses families both with and without children, earning modest incomes and enjoying middle-class pleasantries.
Between June 2022 - May 2023, the share of “Urban Cliff Dwellers” in the weekday captured markets of the Cypress and Katy locations stood at 9.5% and 7.2%, respectively. But once the stores had clinics in place, those numbers jumped to 12.4% and 11.0%, respectively.
This increase in the stores’ reach among “Urban Cliff Dwellers” immediately following the clinics’ openings suggests that in addition to more affluent consumers, middle-class families also harbor considerable interest in these services. As more retailers continue making inroads into the healthcare sector, they may find similar success in attracting diverse groups of convenience-seeking shoppers.
As grocery stores lean into healthcare, they are transforming into multifaceted hubs that offer both essential health services and everyday shopping needs. Retailers like Kroger and H-E-B are reaping the benefits of boosted foot traffic, higher-income visitors, and strengthened community ties – while offering their shoppers convenience that helps streamline their daily routines.
Walmart, Target, and Costco are three of the most popular retailers in the country, drawing millions of shoppers through their doors each day. Each of these retail giants boasts distinct strengths and strategies that cater to their unique customer bases, allowing them to thrive in a highly competitive market.
This white paper takes a closer look at some of the factors that are helping the three chains flourish. How does Walmart’s positioning as a family-friendly retailer help it drive visits in its more competitive markets? How can Target leverage its reach to drive more loyal visits? And what does the increase in young shoppers frequenting membership warehouse clubs mean for Costco?
We dove into the location analytics to explore these questions further.
Examining monthly visitation patterns for the three retail giants shows Costco’s wholesale club model leading the way with consistent year-over-year (YoY) visit growth – ranging from 6.1% in stormy January 2024 to 13.3% in June. Family favorite Walmart followed closely behind, seeing YoY foot traffic growth during all but two months, when visits briefly trailed slightly behind 2023 levels before rebounding.
Target, meanwhile, had a slower start to the year, with visits trending below 2023 levels for most of January to April. Over this same period (the three months ending May 2024), Target reported a 3.7% decline in YoY comparable sales. But since then, things have begun to turn around for the chain, with YoY visits rising in May (2.5%), June (8.9%), and July (4.7%). This renewed visit growth into the second half of the year bodes well for the superstore – and the ongoing back-to-school season may well push visits up further as the summer winds down.
For all three chains, Q2 2024’s visit success has likely been bolstered in part by summer deals and intensifying price wars – as the retailers slash prices to woo inflation-weary consumers back to the store.
Over the past few years, consumer behaviors have been changing rapidly in response to shifting economic conditions. This next section explores some of these changes at Walmart, Target, and Costco, to better understand what may be driving these shifts.
One way that consumers have traditionally responded to inflation and other headwinds has been through the adoption of mission-driven shopping – making fewer, but longer, trips to retailers, so that every visit counts. Superstores and wholesale clubs, which offer one-stop shopping experiences, have long been prime destinations for these extended shopping trips. And even during periods when visits have lagged, these retailers have often benefited from extended dwell times – leading to bigger basket sizes.
A look at changes in average dwell times at Walmart and Target suggests that as YoY visits have picked up, dwell times have come down – perhaps reflecting a normalization of consumers’ shopping patterns. With inflation stabilizing and gas prices lower than they were in 2022 and 2023, customers may feel less pressure to consolidate shopping trips than they have in recent years.
In contrast, Costco’s comparatively long dwell times have remained stable over the past several years. The warehouse club’s bulk offerings, plentiful free samples, and inexpensive food court encourage shoppers to spend more time browsing the aisles than they would at other retailers. And even if mission-driven shopping continues to subside, Costco customers will likely keep on making extra-long shopping trips.
While inflation is cooling faster than expected, prices remain high, and new players are stepping into the retail space occupied by Walmart, Target, and Costco – especially dollar stores. Though higher-income customers increasingly rely on the three retail giants for many of their purchases, customers of more modest means are often drawn to the rock-bottom prices offered at dollar stores.
And analyzing the cross-shopping patterns of visitors to Walmart, Target, and Costco shows that growing shares of visitors to the three behemoths also visit Dollar Tree on a regular basis. In Q2 2019, the share of visitors to Walmart, Target, and Costco who frequented Dollar Tree at least three times ranged between 9.8% and 13.7%. But by Q2 2024, that share rose to 16.7%-21.6%.
Dollar Tree is leaning into this increased interest among superstore shoppers. Over the past year, Dollar Tree added some 350 Dollar Tree locations, even as it shuttered nearly 400 Family Dollar stores. And the chain recently acquired the leases of some 170 99 Cents Only Stores – offering Dollar Tree access to a customer base accustomed to buying everything from groceries to household goods. As Dollar Tree continues to grow its footprint and expand its food offerings, the chain will be better positioned than ever to provide a real challenge to Walmart, Target, and Costco.
Still, the three retail giants each have unique offerings that distinguish them from dollar stores. This next section examines what sets Walmart, Target, and Costco apart – and how they can continue to strengthen their competitive edge.
With competition on the rise, Walmart, Target, and Costco must display agility in navigating an ever-evolving market landscape. This section dives into the data for each chain’s more successful metro areas to see what factors are helping them outperform nationwide averages – and what metrics the retailers can harness to try to replicate these results nationwide.
Target recently expanded its Target Circle Rewards program, rolling out three new tiers for its 100 million members. And this focus on loyalty has proven successful for the chain. Demographic and visitation data reveal a strong correlation between the median household incomes (HHIs) of Target locations’ captured markets across CBSAs (core-based statistical areas), and their share of loyal visitors in Q2 2024: CBSAs where Target locations’ captured markets had higher median HHIs also tended to draw more repeat monthly visitors.
Target’s captured markets in the Los Angeles-Long Beach-Anaheim, LA CBSA, for example, featured a median HHI of $89.8K in Q2 2024 – and 48.0% of the chain’s LA visitors frequented a Target at least twice a month during the quarter. Target stores in the Chicago-Naperville-Elgin, IL-IN-WI CBSA, where the chain’s captured markets had a median HHI of $88.7K in Q2 2024, also had a loyalty rate of 48.0%.
Target generally attracts a more affluent audience than Walmart. And even as the superstore slashes prices to attract more price-conscious consumers, the retailer is also taking steps likely to enhance its popularity among higher-income households. In April 2024, Target debuted a paid membership tier within its loyalty program offering perks like same-day delivery for a fee. Maintaining and expanding these premium offerings will be key for Target as it seeks to attract more affluent customers and replicate its high-performing results in CBSAs nationwide.
The persistent inflation of the past few years, while challenging for some retailers, has also created new opportunities – particularly for wholesalers. Membership warehouse clubs, including Costco, are gaining popularity among younger shoppers, a cohort often looking for new ways to stretch their more limited budgets. An October 2023 survey revealed that nearly 15% of respondents aged 18 to 24 and 17% of those aged 25 to 30 shop at Costco.
A closer look at some of Costco’s best-performing CBSAs for YoY visit-per-location growth highlights the significance of these younger shoppers: In H1 2024, the company’s YoY visit-per-location growth was strongest in areas with higher-than-average shares of young urban singles.
For example, the San Diego-Chula Vista-Carlsbad, CA CBSA experienced visit-per-location growth of 10.4% YoY in H1 2024, while the nationwide average stood at 7.9%. And the CBSA’s share of Young Urban Singles, defined by the Spatial.ai: PersonaLive dataset as “singles starting their careers in trade and service jobs,” was 12.1%, well above Costco’s nationwide average of 7.3%.
Walmart is a one-stop shop for everything from affordable groceries to clothing to home furnishings, making it especially popular among families. The retailer actively courts this segment with baby offerings designed to meet the needs of both kids and parents, virtual offerings in the metaverse, and collectible toys.
And visitation data reveals a connection between the extent of different Walmart locations’ YoY visit growth and the share of households with children in their captured markets.
In H1 2024, nationwide visits to Walmart increased by 4.1% YoY, while the share of households with children in the chain’s overall captured market hovered just under the nationwide baseline. But in some CBSAs where Walmart outpaced this nationwide growth, the retail giant also proved especially adept at attracting parental households – outpacing relevant statewide baselines.
In Boston-Cambridge-Newton, MA, for example, Walmart experienced 5.0% YoY visit growth in H1 2024 – while the share of households with children in the chain’s local captured market stood 7% above the Massachusetts state average. And in Grand Rapids-Kentwood, MI, where Walmart’s share of parental households outpaced the Minnesota state average by an even wider 15% margin, the retailer saw impressive 7.3% YoY visit growth. This pattern repeated itself in other metro areas, suggesting that there may be a correlation between local Walmart locations’ visit growth and their relative ability to draw households with children.
Walmart can continue solidifying its market position by leaning into its family-oriented offerings and expanding its footprint in regions with growing populations of young families.
Walmart, Target, and Costco all experienced YoY visit growth in the final months of H1 2024, with Costco leading the way. And though the three chains still face considerable challenges, each one brings unique strengths to the table. By continuously innovating and responding to changing market conditions, Walmart, Target, and Costco can not only overcome obstacles but also leverage them to reinforce their market positions and drive continued growth.
