Two of America’s biggest big-box retailers—Target and Walmart—announced financial results within a day of each other, serving as a microcosm of sorts for how Americans are shopping ahead of the end-of-year holidays.
One common thread: consumers are value-conscious in an economy where they have been squeezed—or, rather, “pressured,” the word that showed up 17 times in Target’s Nov. 15 earnings call and 13 times in Walmart’s call a day later.
Target found that “the impact of very sticky food and beverage inflation” has “pressured consumers as they’re making choices, and certainly has forced them to make very tough choices when it comes to discretionary goods,” chairman and CEO Brian Cornell said during the earnings call.
The Minnesota-based retailer also noted an uptick in buyers delaying their typical purchases—for example, consumers who previously bought sweatshirts or denim in August or September now deciding to wait until the weather turns cold to make that purchase—owing to “the pressures they’re facing as they work to stretch their budgets until the next paycheck,” Cornell said.
Walmart, for its part, added that consumers are pressed with higher product costs are up compared to last year. The Bentonville, Arkansas retailer is “working hard to lower grocery prices to ease the pressure for customers, giving them more capacity for general merchandise spent,” chief financial officer John David Rainey said during the earnings call. In addition to value, consumers are also coming to Walmart, the nation’s largest grocer with low prices, “ for the convenience” with improved pickup and delivery options, he added.
Quotable: Consumers get cautious about spending
“Overall, consumers are still spending, but pressures like higher interest rates, the resumption of student loan repayments, increased credit card debt, and reduced savings rates have left them with less discretionary income, forcing them to make trade-offs in their family budgets.”
The American retail experience, by the digits
25%: Increase in food and beverage prices compared to pre-pandemic days
2-4%: How much overall unit demand—or how much units a shopper buys per trip—is down across the industry, as per Target
27 million: Americans affected by student loan repayments, as per Walmart’s Rainey
700+: Walmart store modernizations expected in 2023, including the 117 it remodeled earlier this month. “[T]hose remodels have improved apparel, improved home, they have wider aisles,” John Furner, Walmart US president and CEO, said during the earnings call. “And they also have more investment for our online pickup and delivery business, which is a key catalyst for e-commerce growth and help us with being flexible for customers in any type of situation they want to shop in.”