With H2 2023 squarely underway, we dove into the foot traffic data for Walmart, Target, Costco Wholesale, BJ’s Wholesale Club, and Sam’s Club to see how the sector is faring as consumer sentiment improves.
Various Retail Concepts Seeing Success in the Current Environment
The past few months brought a slight year-over-year (YoY) dip to most superstores as many shoppers continued cutting back. May 2023 was particularly difficult, with Walmart, Target, Costco, BJ’s, and Sam’s Club all experiencing a drop in visits relative to May 2022. But the visit gaps narrowed in June and July, indicating that the worst of the inflation-related consumer challenges may finally be over.
Costco – the superstore with the highest median household income in its trade area – outperformed the competition almost every month analyzed. The wholesale club’s relative strength indicates that although the wider economic outlook is improving, ongoing economic headwinds are still weighing on consumer spending, and brands that cater to a more affluent clientele are likely less impacted. Costco’s YoY visit increases are also the latest indication of the chain's ability to pick up members even during more challenging periods, when visitor frequency was offset by mission driven shopping.
Still, it’s not just chains with high-income customers that are doing well in 2023. Walmart – which had the lowest median HHI in its True Trade Area – outperformed Target, BJ’s, and Sam’s Club on a YoY visit basis in June and July, perhaps thanks to an increase in shoppers trading down and looking to stretch their budgets in the face of inflation. The relatively positive visit trends for both Costco and Walmart – which cater to consumers at opposing ends of the income spectrum – indicates that there is room for multiple retail business models to succeed in the current environment.
Yo4Y Context is Key
While the five superstores analyzed showed varied YoY performance, comparing visits to pre-pandemic 2019 highlights the superstore category’s strong position. With the exception of Walmart – which has been consolidating its store fleet since 2019 – the analyzed superstore brands all saw significant year-over-four-year (Yo4Y) growth over the past four months. In particular, Target, BJ’s, and Sam’s Club – where YoY visits fell 1.0%, 3.0%, and 1.0%, respectively, in July 2023 – saw their Yo4Y visits increase 13.3%, 11.0%, and 14.9%, respectively, in the same period.
The superstores’ strong YoY numbers provide some key context for the YoY dips. Despite the economic headwinds of the past year and a half, most major superstore brands successfully held onto their pandemic gains, even as YoY visit numbers fluctuated. These Yo4Y visit metrics indicate that even the superstores with slight YoY declines are still well-positioned to bounce back once the wider economic situation stabilizes.
Walmart Still Has Growth Potential
In fact, even Walmart – the only superstore analyzed with Yo4Y dips – is seeing significant visit increases in certain states, indicating that America’s largest retailer still has growth potential and that the wider superstore category is still very attractive to 2023 consumers.
Analyzing YoY visits to Walmart in the Northeast – Pennsylvania, New York, New Jersey, Connecticut, Massachusetts, Rhode Island, Maine, New Hampshire, and Vermont – reveals that YoY visits to northeastern Walmarts vastly outperform the Walmart nationwide YoY visit average. Between January and July 2023, foot traffic to Walmart venues in the selected states consistently exceeded 2022 levels, with the exception of May which was a challenging month for retail in the U.S. across sectors.
Walmart's visit increases in the northeast suggests that, even as the retailer closes stores in some parts of the country, the company still has room for growth in other regions – and that superstores will remain an indispensable part of the wider retail landscape in 2024 and beyond.
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