Walmart Inc WMT.N chose neighborhood 100-yen store or Aldi over driving to Walmart Supercenter when gasoline was $5 Gallon may face an uphill battle trying to win back US shoppers.
Gasoline prices fell nearly 20% in the past month, according to foot traffic data surveyed by Reuters and analysts, but shoppers are still growing at the nation's largest retailer. No signs of coming back.
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Inflation remains at a 40-year high, spending a large portion of the grocery budgets of many Americans, especially cost-conscious Walmart shoppers. I am eating up.
According to Placer.ai data, foot traffic at Walmart's 3,573 U.S. supercenters and 370 discount stores (as of January 31, 2022) increased from June 1 to July 25. decreased by an average of 2.7% over the period. , a location analytics company.
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Meanwhile, Aldi ALDIEI.UL, owned by German discount grocer Aldi Süd, saw an 11.5% increase in traffic. , the number of shopper visits increased by 4.1% in dollars in general.
When Walmart reports its second-quarter earnings on Aug. 16, analysts are likely to focus on the question of how it will recover from declining foot traffic.
It may not be easy or cheap. It said it needs to invest more in local advertising.
Cutting back on local newspaper advertising has become Walmart's "Achilles heel," Flickinger said. If Walmart wants to keep customers coming back, it has to spend more on "high value advertising" that emphasizes promotions and rollbacks.
According to data from consumer research firm Numerator, the median household income for Walmart shoppers is $73,000.
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In June, inflation hit a 40-year record of 9.1% and gasoline prices averaged It jumped to $5.006 (June 13) according to the US Energy Information Administration, up from $3.161 a year ago. According to some economists, higher gas prices have cut the typical low-income American's monthly spending budget by hundreds of dollars.
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Wal-Mart CEO Doug McMillon previously described the retailer as an "inflation-fighting company" and an economic downturn. characterized as a prime destination for recession shoppers. period. But according to a monthly consumer survey from Prosper Insights & Analytics, cited in a Cowen Co memo, Walmart's share as a first choice for grocery purchases climbed from 27.4% in June to In July he dropped to 25.5%.
McMillon recently told investors, particularly low-income shoppers, that in the three months through April 30, he would buy fewer items and store sales in response to rising fuel prices. He said he consolidated his visits to
His monthly spending on gasoline in July rose to 5.57% of his typical American household income, according to GlobalData. This brings his monthly after-tax income to $5,412, up from 2.79% of his earnings in December 2019. Poor households typically spend most of their income on gas and other necessities.
Wal-Mart Supercenters, which average about 190,000 square feet (17,651.6 sq m), sell grocery and deli products alongside clothing, household goods, and electronics, but are located outside metropolitan areas. It tends to be a must for many shoppers to shop. Drive at least a few miles. Supercenters do not sell gas.
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Read More: US Inflation Hits 8.5 % drop, supply chain shows signs of improvement
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Walmart and Target of TGT.N issued a profit warning over the past two years U.S. shoppers are skipping aisles full of clothing and sporting goods while saving money on their living expenses, mostly by buying low-margin food and other necessities.
Walmart's warning in late July was "to diagnose the average American household," said Jefferies analyst Stephanie Wisink. rice field. She said it also revealed that shoppers' monthly budgets were being squeezed and many were making fewer trips to the grocery store.
Target's 1,937 stores saw a drop in traffic from mid-June through his week of July 25, according to Placer.ai data.
Jason Benowitz, a senior portfolio manager at the Roosevelt Investment Group, said Walmart has the advantage of offering a wider selection, but the convenience of a dollar store. Said location benefits when fuel prices are high.
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Shoppers to Dollar General DG. visits increased in all weeks of June and most of July compared to the same period last year. the data shows. Dollar General operates more than 18,400 stores in the US compared to Walmart's 5,342 stores, according to its latest annual report.
Placer.ai Such as Family Dollar and Dollar Tree DLTR.O, which do not provide data on shop chains. However, according to the $1 Stores Quarterly Index, foot traffic to discount stores increased 8% year-over-year in the second quarter and increased 13.2% quarter-over-quarter.
"The distance to reach the nearest Walmart for most typical U.S. shoppers could be twice as far for him as the $1 store," said Benowitz. says.
(Reporting by Arriana McLymore and Siddharth Cavale in New York, Editing by Vanessa O'Connell and Matthew Lewis)
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