Thanks for Visiting!

Register for free to get the full story.

Sign Up
Already have a Placer.ai account? Log In

Economic Headwinds for Walmart and Target

by 
Ethan Chernofsky
 on 
August 10, 2022
Economic Headwinds for Walmart and Target

Put lightly, the last few years have been volatile in the brick-and-mortar retail sector. Yet, Walmart and Target, two of the industry’s heavyweights have consistently overperformed. This included a strong showing in the spring of 2022 that came as COVID’s effects were dissipating, creating the sense that retail could finally enjoy a period of extended normalcy.

Yet, that period barely had time to take off before rising gas prices and inflation began to impact consumer behaviors and spending. This led both Walmart and Target to warn that profit challenges were expected as the year progresses – especially as they looked to keep prices down in an environment of economic uncertainty.

So, where do these giants stand in terms of brick-and-mortar performance, and just how bad are things trending? We dove into the data to find out. 

Back-to-School Challenges

Indeed, visits to both Walmart and Target were down 2.7% and 2.9% respectively in July of 2022 compared to the same month in 2021. But this was only the second such visit decline in year-over-year (YoY) numbers since March of 2021 for Target, and the third for Walmart. And while inflation and high gas prices are clearly playing a role, an additional factor comes from the unique heights hit in July of 2021.

In July of 2021, Walmart and Target were up over 16.0% compared to 2020 and up 2.9% and 15.9%, respectively, compared to July two years prior during the particularly strong 2019 Back-to-School season. So while visits are down, the relatively minor decreases even amid very significant economic challenges are actually quite impressive.

The relative strength of both retailers also comes into heightened view when compared to other categories in the retail sector. Visits have trended closely with, if not above, a high-performing grocery segment and well beyond retail segments like home improvement, restaurants, and department stores. The players are only lagging behind dollar and discount, a segment that is uniquely well-positioned for the current situation and is still benefiting from aggressive expansions over the last year.

2019 Context and Positive Visit Trends

The optimism continues to build when looking at the same monthly data compared to the aforementioned 2019 period directly. From this view, Walmart visits were essentially flat, while Target’s were up significantly. 

And a month-over-month (MoM) view shows that within those relatively strong comparisons, July marked a strong move forward compared to June. Visits were up 5.2% for Walmart and 4.5% for Target MoM, a sign that while economic headwinds were limiting visits in June, the Back-to-School season still drives urgency and visits.

There is also ample reason to believe that the situation will actually get better. Gas prices are beginning to decline, the pull of superstores has an added value in times of inflation, and even inventory issues could be a short-term blessing as the push to keep prices low for those products aligns well with trading-down behavior. In addition, the YoY comparison in the coming months will be easier as August and September saw the impact of the Delta variant in 2021. 

There is still a question of whether basket sizes increase even as visits decline – and indications from visit duration do suggest that consumers had more in-store time to fill their carts in recent months, with visit duration up in June and July. This indicates that some form of mission-driven shopping has returned as a response to the cost of gas leading to the potential for larger basket sizes. Essentially, consumers are looking to avoid the impact of gas prices by preferring visits to stores that have more products under one roof and then spending more time at those locations. If this does align with increased summer basket size, the impact could be very significant.

So where are Target and Walmart heading? 

The likeliest conclusion is that the wider economic headwinds will impact profitability and even limit the overall success that the brands could have otherwise had. However, equally likely is continued growth and major relative success when compared to the wider retail environment. 

And even the negatives need to be seen in context. While profits might be pinched in the shorter term, that is a direct result of a decision to keep costs lower for customers – something that should only contribute to the incredible customer loyalty both chains already benefit from. In addition, though visits are down, there are very strong signs that mission-driven shopping has returned, adding more weight to each visit. This is critical because it shows the unique power of these brands to turn even difficult circumstances into drivers for longer-term growth.

How will Target and Walmart perform during Back to School? Visit placer.ai to find out. 

Get 3 brand & industry
breakdowns every week

Subscribe to the newsletter

Great! Prepare your inbox for data-driven insights...
Oops! Something went wrong while submitting the form.

Get a Demo

Please enter your first name
Please enter your last name
Please provide a valid email
Please enter your email
Please enter company name

Thanks for reaching out!

One of our experts will be in touch soon

Try Placer.ai Free
Oops! Something went wrong while submitting the form.
Digitally Native Brands Lean Into Brick & Mortar
Washington, D.C. Population Changes & Trends
A Location Intelligence Perspective on Macy’s Rightsizing
Amazon-Powered Shopping: The Future of Brick-and-Mortar Grocery?
Cold Weather, Hot Visits: Diving into Winter Resorts
Wawa and 7-Eleven: Leaning Into the “Slurpee Effect”
2022 and Beyond: Catching Up With McDonald’s & Chipotle
Let’s Have Some Fun! Going Out Is In
Placer.ai’s Q4 2022 Quarterly Index
Placer.ai Adds Industry Executives to Leadership Team To Drive Company's Next Phase of Growth
5 Emerging Retail Formats: 2023’s Brick-and-Mortar Evolution
Grocery Update: Zooming in on the Lone Star State
2022 Office Recap: The Year of the TGIF Work Week
What Lies Ahead for Brick-and-Mortar Luxury in 2023
Placer.ai Mall Indexes: December 2022 Recap
Looking Back on 2022’s Holiday Shopping Season
Post-Pandemic Migration Trends in New York
Top Retailers for 2023
The Live Sports Advertising Opportunity
Domestic Migration to the Mountain States: Small Shifts with Big Implications
New Year, New Food: 5 Dining Trends For 2023
Announcing Placer.ai’s COVID RECOVERY DASHBOARD
This is Why Shop-in-Shops Are Everywhere
Super Saturday 2022 Recap
The San Francisco Shift
Grocery Year-End Update: Publix in the Spotlight
Three Ways Retailers Can Think Small to Increase Store Impact
Offline Beauty Is on an Upswing
The Evolving Migration Patterns of New York’s Florida Snowbirds
Placer.ai Office Index: November 2022 Recap
How Viral Social Media Trends Can Drive Offline Engagement
Are You Ready for Some Football? Experiential Marketing Shows Promise
Mall and Shopping Center Trends For 2023
Retail Corridors and Indoor Malls: A Holiday Head-to-Head
Placer Bytes: Nike, lululemon, and GameStop Update
Placer.ai Mall Indexes: November 2022 Update
Black Friday 2022: Consumers Hear the Call
Digitally Native Brands: Taking Off, Offline
Discount and Dollar Stores Leading the Pack
Turkey Wednesday 2022
Retail’s Evolving Holiday Season
Placer Bytes: Starbucks and Department Stores Ahead of Black Friday
Ulta: A Force to be Reckoned With
College Towns Drive Dining Growth
Foot Traffic Trends Reveal Consumers Ready for Holiday Cheer
How Retailers Can Win Big By Going Small
How Are Consumers Feeling Ahead of Black Friday 2022?
Off-Price, Hibbett, and Dick’s Pre-Holiday Check-in
Ho, Ho, Wholesale: Costco, Sam’s Club, and BJ’s
October 2022’s Retail Rebound
Target and Walmart Ahead of the Holidays
Home Improvement: Leave it to the Pros
Despite Inflation, Holiday Season is Off to a Good Start
Placer.ai Office Index: October 2022 Recap
Placer.ai Mall Indexes- October 2022 Update
Americans Double Down on Fitness
The State of Grocery
CVS and Walgreens: The Wave Continues
Coffee Chains Brewing Up Visits
Placer.ai Spotlight: Pizza Players
What Drove COVID-Era Urban Migration Trends?
Kroger and Albertsons: A Merging of Strengths
Texas Roadhouse Innovations Dishing Up Success
Holidays on the Horizon: Mid-Range and Luxury Shopping
McDonald's and Chipotle's Post-Pandemic Success
Announcing Placer.ai’s Q3 2022 Quarterly Index
5 Hot Restaurant Brands for 2023
Target Finds a Winning Deals Day Formula
Five Trends to Watch for 2022’s Holiday Shopping Season
September 2022 Analysis: A Difficult Month and Time for Optimism
Inflation’s Retail Winners
Five Apparel Retailers to Watch Ahead of the Holidays
Placer.ai Spotlight: Wawa’s QSR Pivot
Placer.ai Mall Indexes: September 2022 Recap
Placer.ai Office Indexes: September 2022 Recap
The Impact of Population Growth on Commercial Real Estate 
Starbucks' New Makeover
There's Somethin' About Pumpkin
Expanding Offline Reach
Breakfast Restaurants are Rising in Popularity
The Power of Labor Day 2022
Tourism in Miami Heating Up
Citi Trends on the Rise
Reaching Rural Consumers Through Retail Media Network
Darden Restaurants Cooking Up Success
The Home Improvement Sector: A Sign of Consumer Confidence
QSR Is Having a Northeastern Growth Spurt
Domestic Migration’s Ripple Effects
A Look Back at Back To School 2022
Kroger Digital Tell-All
The Return of In-Person Networking
The Reinvention of the American Mall  
Placer.ai Office Building Indexes: August 2022 Recap 
Placer.ai Mall Indexes - August 2022 Recap
Five Below’s Back to School Success
Plus-Size Fashion’s Staying Power
Placer Bytes: Best Buy & GameStop 
Petco Barking Up the Right Tree
Lipstick Effect Boosts Ulta’s Growth 
Placer Bytes: DICK's Sporting Goods and Hibbett Sports