What is in this article?:
- Supercenters Gain Amid Consumer Slowdown
- Fresh Food Right on Target
“The results of these two companies confirm that consumer spending has clearly decelerated from earlier in the year.”
— Craig Johnson, president, Customer Growth Partners
MINNEAPOLIS — Mass discounters Target Corp. and Wal-Mart Stores continued to drive traffic and ticket gains amid a weakening retail sales climate, financial results released by the respective companies last week showed.
While comparable-store sales gains were relatively modest — Target, based here, saw a 3.1% comp increase, while Bentonville, Ark.-based Wal-Mart saw comps at its U.S. stores rise by 2.2% for financial periods ending July 28 and July 31, respectively — they look like winners in a retail sales derby that slowed considerably, particularly for supermarket operators, observers told SN last week.
“The results of these two companies confirm that consumer spending has clearly decelerated from earlier in the year,” Craig Johnson, president of Customer Growth Partners, Wilton, Conn., said. “It confirms that what earlier in the year was a 6% growth rate, has decelerated to about half that.”
Wal-Mart’s overall U.S. retail sales were up by 3.8% to $67.4 billion. Target saw its overall sales improve by 3.5% to $16.5 billion. Johnson estimates retail sales overall grew by 3% in the period, “so by definition [Wal-Mart and Target] are gaining share.”
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For Wal-Mart, that gain includes a disproportionate increase in food and consumable sales: Grocery and consumable comps improved in the “low single digits” during the quarter, officials said, and are gaining momentum behind further price investments and an ongoing campaign comparing prices on identical baskets of goods at Wal-Mart and a supermarket competitor. Those ads are currently running in 25 metro markets.
“We’re proud that we do so well competitively on the basket challenges,” Bill Simon, chief executive officer of Walmart U.S., said in recorded remarks last week. “We’re also pleased with the traffic and sales results versus control markets.”
A campaign around Wal-Mart’s USDA Choice steak offerings helped drive new traffic to the meat department, Simon added, with meat outperforming overall food sales gains by 3% during the quarter. “The unmatched combination of quality and value has resonated with a large number of our customers, including many who had not previously shopped our meat department.”