Thanks for Visiting!

Register for free to get the full story.

Sign Up
Already have a account? Log In

Economic Headwinds for Walmart and Target

Ethan Chernofsky
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 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 Free
Oops! Something went wrong while submitting the form.
Text Link
Text Link
Text Link
Pent-Up Demand Ahead of October Sales Events
4 Strategies Retailers are Using to Drive Traffic to Their Venues
5 Key Regional Grocery Players Impressing in 2023
Upscale Kitchenware Trending Up
Costco Finds More Room for Growth
Four C-Store Chains Making an A-Grade
National Parks + Outdoor Summer Activities
Diving Into Darden: Summer 2023 Update
The Summer Event Effect
Messi: Massive in Miami
Looking Back on Back to School 2023
The Anchor Recap: August 2023 Office Index: August 2023 Recap Mall Index: August 2023 Recap White Paper Recap: August 2023
Starbucks Pumpkin Spice Latte Strikes Again
Big Scoop: We All Scream For Ice Cream
Sports Away: Lululemon & Nike’s Momentum Continues
Summer Visits Heat Up For Recreation and Outdoor Gear Chains
No CSS overwrite - July 2023 Office Index Recap
Staging - August 2023 Mall Indec
Mid-Atlantic Grocery Deep Dive
Experiential Chains Heating Up This Summer
Petco Goes Big by Going Small
Ulta Beauty: Leading the Discretionary Pack
Discount and Dollar Chains Continue to Thrive
Summer of Sports: DICK’s Sporting Goods and Hibbett Sports
Off-Price: Succeeding Into Summer
The Anchor Recap: July 2023
Superstores Maintaining Pandemic Gains Amidst Economic Headwinds
2023: Home Improvement at the Halfway Point
July 2023 Office Index Recap Mall Index: July 2023 Recap
widget test
The Taylor Swift Visit Lift
Southwestern Grocery Dive
July 2023 White Paper Recap: Halfway Point Review & Quarterly Index
Yum! Brands: Driving Dining Visits
Slurpees and Summer Movies Stimulate Consumer Foot Traffic
Cool Beans: Summer Coffee Update
Checking In on Back to School 2023
Crocs and New Balance Tip The Scales
Burger Bliss: Shake Shack and In-N-Out Stacking Visits
Chipotle & McDonald's Continue to Reign Supreme
Vibenomics and Partner to Enhance Retail Media In-Store Measurement
California Grocers Here We Come!
Marriott’s Different Audiences
Bonchon and Kura Sushi Thrive in the Fast-Casual Scene
A Shoe In: Footwear Climbs to the Top
Cheers! Raising a Glass to Beverage Retail Office Index: June 2023 Recap Mall Index June 2023 Recap – A Turn of the Tide and a Dive into Open-Air Lifestyle Centers
Local Kitchens: Redefining the Restaurant
Unlocking Urban Insights: The Value in Manhattan’s Employees
Ohio State Parks On The Rise
How is Inflation Impacting the High-Income Shoppers?
Five Fast-Growing Dining Chains
What To Expect From Prime Day and July Sales Events in 2023
The State Of Fashion: How Are Apparel Retailers Faring in 2023?
2023’s Latest Dining Success Story: GEN Korean BBQ House
The NBA Finals: A Location Intelligence Perspective
Moving the Market: The Impact of Domestic Migration on Housing Costs
Post-Pandemic Museum Update
The Darden-est Things
The Enduring Demand for Urban and Suburban Retail
Leveraging Data to Evaluate the Impact of Municipal Investments
Trader Joe's Success Amidst Food Inflation and Changing Consumer Behavior Office Index: May 2023 Recap
Fitness at its Fittest: Staying Strong in 2023
Movie Theaters, Off-Price, and Home Improvement: May 2023 Recap Mall Index - May 2023 Recap
What’s Working for Bath & Body Works?
Why Are Specialty Grocers Thriving in 2023?
The CAVA Craze: A Location Intelligence Perspective on the Mediterranean Marvel
How Will Primark’s US Expansion Impact Target?
All Eyes on Eyewear
Northwestern U.S. Grocery Dive
Return of the Lunch: Salad Chains Are Thriving
Retail Media Networks – Off the Beaten Track
Bet Your Bottom Dollar: Discount and Dollar Stores Drive Foot Traffic
Ulta & Lululemon: Discretionary Spending On The Up
The Score After Q1: Sporting Goods Chains
Who Uses NYC Airports: Biting Into The Big Apple’s Main Transport Hubs
Off Price: Strength in The Face of Retail Challenges
Visits Improve for Home Improvement
Walmart, Target & Wholesalers in Q1 2023 – The Return of Mission-Driven Shopping?
Department Store Roundup: Q1 2023 Office Index: April 2023 Recap Mall Index, April 2023 – A Rebound on the Horizon?
How Will Bed Bath & Beyond’s Bankruptcy Impact the Retail Space?
Buffet Restaurants: Filling Up on Foot Traffic
Thrift Stores: Vintage Visits Drive New Age in Apparel
The Windy City: A Hub of Post-Pandemic Opportunity
Diving into Dining Traffic - Q1 2023
Bring On The Joe
A Dollar (or more) For Your Thoughts: Five Below and pOpshelf
Dining Out With The Cheesecake Factory
Retail Foot Traffic Recap – March 2023
Digging Into 2023: McDonald’s and Chipotle Update Office Index: March 2023 Recap