# Walmart’s long-lasting challenge: luring budget shoppers back to its stores
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-08-11
Category: NEWS
Category URL: https://financedigest.com/category/news
Meta Title: US Retail: Walmart's Battle to Win Back Shoppers
Meta Description: Discover why US shoppers are turning to dollar stores and Aldi rather than Walmart, and how the retail giant aims to lure them back amid tough competition.
URL: https://financedigest.com/walmarts-long-lasting-challenge-luring-budget-shoppers-back-to-its-storeshtml

![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/2022-08-11t100726z2lynxmpei7a0efrtroptp4usa-walmart-traffic-1736815486633-compressed.jpg)

By Arriana McLymore and Siddharth Cavale

(Reuters) – Walmart Inc could face an uphill battle to reclaim U.S. shoppers who opted for the neighborhood dollar [store or Aldi rather than driving farther to a Walmart](https://www.financedigest.com/ikea-plans-new-u-s-stores-in-2-2-billion-push-to-challenge-walmart-and-wayfair.html "IKEA plans new U.S. stores in .2 billion push to challenge Walmart and Wayfair") Supercenter when gasoline was $5 a gallon.

While gasoline prices have dropped nearly 20% over the past month, there are no signs [shoppers are returning to the nation’s biggest retailer](https://www.financedigest.com/uk-retailers-see-40-jump-in-boxing-day-shoppers-springboard.html "UK retailers see 40% jump in Boxing Day shoppers -Springboard"), according to foot traffic data reviewed by Reuters and analysts.

[Inflation remains at a 40-year](https://www.financedigest.com/uk-inflation-hits-40-year-record-highest-in-g7.html "UK inflation hits 40-year record, highest in G7") high, devouring a large chunk of the grocery budgets of many Americans, especially Walmart’s legions of cost-conscious shoppers.

Foot traffic at Walmart’s 3,573 U.S. Supercenters and its 370 discount stores (as of Jan. 31, 2022) fell 2.7% on average from June 1 through July 25 versus a year earlier, according to data from Placer.ai, a location analytics firm.

Meanwhile, traffic rose 11.5% at Aldi, owned by German discount grocer Aldi Süd, and the [number of shopper](https://www.financedigest.com/uks-december-shopper-numbers-defy-inflation-and-rail-strikes-hit.html "UK’s December shopper numbers defy inflation and rail strikes hit") visits climbed 4.1% at Dollar General.

The question of how to reverse the loss in foot traffic will likely be a [focus for analysts when Walmart reports second-quarter earnings](https://www.financedigest.com/european-shares-rebound-with-focus-on-italian-politics-earnings.html "European shares rebound with focus on Italian politics, earnings") on Aug. 16.

It may not be easy – or cheap.

Walmart store traffic trends compared with Dollar General and Aldi: https://fingfx.thomsonreuters.com/gfx/mkt/zdvxoznmxpx/Dollar-general-and-aldi-have-attracted-more-shoppers-than-walmart-since-june%20(1).png

![](https://www.globalbankingandfinance.com/wp-content/uploads/2022/08/438-666x500.jpg)

Burt Flickinger, managing director of Strategic Resource Group, said Walmart needs to [invest more in local advertisements to lure people back into stores](https://www.financedigest.com/sainsburys-pays-524-million-for-full-ownership-of-store-investment-vehicles.html "Sainsbury’s pays 4 million for full ownership of store investment vehicles").

[Cutting back](https://www.financedigest.com/asos-reports-first-half-loss-as-shoppers-cut-back.html "ASOS reports first-half loss as shoppers cut back") on local newspaper ads has become Walmart’s “Achilles heel,” Flickinger said. If the [company wants customers](https://www.financedigest.com/swiss-insurance-company-helvetia-uses-squirro-to-deliver-better-search-results-to-its-five-million-customers.html "Swiss insurance company Helvetia uses Squirro to deliver better search results to its five million customers") to return, Walmart must spend more money on “high-value ads” that highlight promotions and rollbacks.

Walmart shoppers have a median household income of $73,000, according to data from Numerator, a [consumer insights](https://www.financedigest.com/incoming-starbucks-boss-to-bring-consumer-insight-to-coffee-culture.html "Incoming Starbucks boss to bring consumer insight to coffee culture") firm.

In June, inflation reached 9.1%, a four-decade record, while gasoline [prices soared to $5.006 a gallon on average](https://www.financedigest.com/taylor-wimpey-espana-remain-cautiously-optimistic-as-average-selling-price-increases-by-20-4.html "Taylor Wimpey España ‘remain cautiously optimistic’ as average selling price increases by 20.4%") (June 13), up from $3.161 a year earlier, according to the U.S. Energy Information Administration. [Higher gas prices shaved hundreds of dollars](https://www.financedigest.com/dollar-advances-as-strong-u-s-data-backs-higher-rates-backdrop.html "Dollar advances as strong U.S. data backs higher rates backdrop") off the monthly spending budgets of the typical low-income American, according to several economists.

Walmart [CEO Doug McMillon has previously characterized the retailer as an “inflation-fighter” and a top](https://www.financedigest.com/top-diamond-producer-de-beers-names-equinors-cook-as-new-ceo.html "Top diamond producer De Beers names Equinor’s Cook as new CEO") destination for shoppers in recessionary periods. But Walmart’s [share as the first choice for grocery purchases](https://www.financedigest.com/the-benefits-of-purchasing-fractional-shares-you-should-know.html "The Benefits of Purchasing Fractional Shares You Should Know") dropped to 25.5% in July, from 27.4% in June, according to a Prosper Insights & Analytics monthly consumer survey cited in a Cowen & Co note.

McMillon recently told investors that shoppers – especially from lower-income households – bought fewer items in the three months through April 30, even they also consolidated their trips to the store in response to [higher fuel prices](https://www.financedigest.com/vhs-tapes-selling-for-46000-higher-than-original-price.html "VHS tapes selling for 46,000% higher than original price").

Monthly spending on gas in July rose to 5.57% of the income of a typical American [household](https://www.financedigest.com/four-fifths-of-uk-households-saw-disposable-income-fall-in-august-says-asda.html "Four fifths of UK households saw disposable income fall in August, says Asda") – which earns $5,412 per month post-tax – up from 2.79% of income in December 2019, according to GlobalData. Poorer households generally spend a bigger portion of their incomes on gas and essentials.

Walmart Supercenters, which average about 190,000 square feet (17,651.6 square meters) and sell groceries and deli items, alongside clothing, [home products](https://www.financedigest.com/what-are-the-best-ways-to-become-more-productive-working-from-home.html "What are the best ways to become more productive working from home? "), and electronics, tend to be located outside of major metropolitan areas, requiring many shoppers to drive at least several miles. Supercenters do not sell gas.

[SAVE MONEY](https://www.financedigest.com/how-to-save-money-for-a-car.html "How to save money for a car"), SHOP CLOSER

Both Walmart and Target Corp issued [profit warnings](https://www.financedigest.com/bootmaker-dr-martens-warns-on-profit-as-finance-chief-walks.html "Bootmaker Dr Martens warns on profit as finance chief walks") over the past two months, noting that U.S. shoppers responded to the rising [cost of living by buying](https://www.financedigest.com/blessing-or-burden-what-else-could-you-buy-for-the-cost-of-your-timeshare.html "Blessing or burden? What else could you buy for the cost of your timeshare?") primarily lower-margin food and other essentials, while skipping aisles filled with clothes and sporting goods.

Walmart’s warning in late [July was “a diagnostic look at the average American household,”](https://www.financedigest.com/energy-costs-for-most-british-households-to-fall-18-from-july-cornwall-insight.html "Energy costs for most British households to fall 18% from July -Cornwall Insight") Jefferies analyst Stephanie Wissink said. It showed the squeeze on shoppers’ monthly [budgets that also led many to cut](https://www.financedigest.com/icrc-to-cut-some-1500-jobs-as-humanitarian-budgets-seen-sliding.html "ICRC to cut some 1,500 jobs as humanitarian budgets seen sliding") back on their trips to grocery stores, she said.

At Target’s 1,937 stores, traffic declined from mid-June through the week of July 25, Placer.ai data shows.

While Walmart has an advantage of offering a larger selection, dollar stores’ more convenient locations offer an advantage when fuel prices are high, Jason Benowitz, [senior portfolio manager](https://www.financedigest.com/senior-managers-regime-what-does-it-mean-for-the-industry.html "SENIOR MANAGERS REGIME – WHAT DOES IT MEAN FOR THE INDUSTRY?") at the Roosevelt Investment Group, said.

Shopper [visits to Dollar General stores](https://www.financedigest.com/ikea-stores-owner-ingka-says-campaigns-help-boost-store-visits-and-sales.html "IKEA stores owner Ingka says campaigns help boost store visits and sales") rose in all weeks of June and for most of July, versus the same period last year, the data shows. Dollar General [operates more than 18,400 stores](https://www.financedigest.com/kfc-franchisees-in-russia-ask-govt-to-halt-sale-of-stores-to-local-operator-ria.html "KFC franchisees in Russia ask govt to halt sale of stores to local operator – RIA") in the United States compared with Walmart’s 5,342 U.S stores, [according to its latest annual](https://www.financedigest.com/us-homeowners-premium-set-to-surpass-90bn-for-the-first-time-according-to-annual-aon-study.html "US homeowners premium set to surpass bn for the first time, according to annual Aon study") filing.

Placer.ai did not provide [data on other dollar](https://www.financedigest.com/oil-slumps-on-economic-data-stronger-u-s-dollar.html "Oil slumps on economic data, stronger U.S. dollar") store chains, such as Family Dollar and Dollar Tree. However, its quarterly index for dollar stores shows that foot [traffic to discount stores in the second quarter increased](https://www.financedigest.com/benefits-of-increasing-blog-traffic-with-guest-blogging-and-posting-service.html "Benefits of Increasing Blog Traffic With Guest Blogging and Posting Service") 8% year-over-year and jumped 13.2% compared with the last quarter.

The [driving distance for a typical shopper across](https://www.financedigest.com/deloitte-partners-with-fintech-scotland-to-drive-growth-across-the-sector.html "Deloitte partners with Fintech Scotland to drive growth across the sector") much of the U.S. may be twice as far to [reach the nearest Walmart as compared to a dollar](https://www.financedigest.com/analysis-g7-fails-to-reach-intervention-deal-to-ease-pain-of-soaring-dollar.html "Analysis-G7 fails to reach intervention deal to ease pain of soaring dollar") store,” Benowitz said.

Gas [prices have surged](https://www.financedigest.com/unicredit-sets-out-8-billion-aid-package-for-italy-clients-hit-by-surging-prices.html "UniCredit sets out  billion aid package for Italy clients hit by surging prices") since the beginning of 2022: https://fingfx.thomsonreuters.com/gfx/mkt/jnvwenxlovw/Prices-have-spiked-at-gas-stations-since-the-start-of-2022%20(1).png

![](https://www.globalbankingandfinance.com/wp-content/uploads/2022/08/439.jpg)

(Reporting by Arriana McLymore and Siddharth Cavale in New York; Editing by Vanessa O’Connell and Matthew Lewis)


---
This blog is powered by Superblog. Visit https://superblog.ai to know more.
---