[PYMNTS] From Cautious Consumers to Tariff Jitters: Walmart and Amazon Face Q1 Headwinds

[papy]

Pay attention when the big guys express concerns about consumer demand. Be ready to adapt to changing trends in non-essentials.

The retail giants attributed the weak guidance to factors like inflation, weak consumer demand and foreign exchange challenges.

Other impacting factors include tariffs and the shift in consumer focus toward essentials, which are contributing to softer demand for discretionary items.

“Uncertainty seems to be the buzzword of earnings calls,” Neil Saunders, managing director of retail at research firm GlobalData, told PYMNTS in an interview.

From Cautious Consumers to Tariff Jitters: Walmart and Amazon Face Q1...

[papy]

Add Target and Costco to the mix.

Customer visits to Target, Walmart and Costco have slowed over the last four weeks, but they have dropped the most at Target, according to Placer.ai., which uses phone location data to track visits. The slowdown could also be attributed to weather, economic conditions and other variables, Placer.ai cautioned. During the week of February 17, the latest week available, foot traffic to Target dropped 7.9% and 5.2% to Walmart.

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Sellers, what strategies are you using to combat low consumer confidence? How are you planning to weather the possibilities of lowered earnings expectations?

[wadeorcas]

Our local Island Market runs a yearly prepaid shopping card for 20% off up to $2500 ($2000 for a $2500 card) for everything, mostly used by locals to offset already high costs associated with living on an island. This year this promotion started today and much of the savings over the next few months will be negated.

[Picks_by_Nisha]

I’m surprised about Costco. First of all, they didn’t do away with DEI programs like Target, so shouldn’t be part of that boycott (of course, plenty of people will just boycott anything anyway, without even knowing why).

And while anecdotal, the last couple of times I’ve been to Costco, it’s been packed, even more than normal.

[Pepper_Thine_Angus]

Costco can have my $120 per year and I question nothing. They treat their employees right and always have been, hence why the same people work at costcos for years, normally only leaving to go to another location.

[lake]

Let us remember that a weak guidance, even if it causes the value of the stock to drop is unlikely to affect management compensation including bonus money as much as a missed target for earnings will.

These executives are experienced enough and savvy enough to lower expectations, and that is more likely to happen in any situation where no one can predict what is going to happen to the economy and in people’s heads.

If the guidance was positive under these circumstances that would be even more troubling.

[Pepper_Thine_Angus]

@papy

which uses phone location data to track visits.

AHHHH, ok, just an FYI, the 3 costcos in my area have POOR cell service, so tracking visits is gonna be tough!

When they had the full service cell phone kiosk the reps had to go outside to activate phones.

FYI, I 100% do not mind scanning my card at entrance! That may also be why there is a “decline” cause membership is now double checked at the door due to the “tiktok” thingy telling everyone to just go and then use self check to get around membership rules.

[papy]

@Picks_by_Nisha

I’m surprised about Costco.

If accurate, I suspect any decrease is more about general consumer uncertainty and lost jobs, than any specific grievances.

[Picks_by_Nisha]

Of course, there is also the conflating factor that, at least in my area, Costco not only has eggs, but a 24 pack there costs less than a dozen at my normal store; which, of course, is why I was there in the first place.

[Picks_by_Nisha]

Reading a story on cnn, from what I believe is the same source (using phone tracking), all of these stores were down for a 4 week period. But:

During the week of February 17, the latest week available, foot traffic to Target dropped 7.9% and 5.2% to Walmart. Foot traffic to Costco, which has stood by its DEI policies, increased 4.8%.

I don’t think that the calls for boycotts go back 4 weeks, or at least, they didn’t have much attention. So at least in that regard, I think the latest week may be more meaning full.

[ModernSwitch]

Target just doesn’t seem to be a fun place to shop anymore. Not anything really related to politics, mostly just economics.

So one of the things I’ve noticed lately at target is that when I am returning stuff (kids clothes my kids didn’t like mostly) they are just marking stuff and salvaging it. It used to be they would slap a clearance sticker on it and throw it in the clearance section. Brand new stuff that I’m sure people would snap up on clearance. One of the things I enjoy at target is checking out all the clearance end caps. So I don’t know if I was just sad about the waste because I feel sad buying and returning something for it to end up in the trash .

I realized I was almost out of nonstick foil and they wanted almost $12 for the large roll and I kind just was like and knowing I had a Walmart trip scheduled I decided to just check the price and it was $2 cheaper and then I kinda just went down my list and realized that I really am saving a lot more by just going to Walmart and then I’m not spending money on clearance things I probably don’t need. Like why am I spending more money at a store because I get the Joy Thrill of maybe finding something on clearance ?

So now I’m not even sure I even really want to go back to Target? I used to go there 2 to 3 times a week but as I’ve stopped spending money on things we don’t really need and the price of everything going up I have found myself only going maybe every other week. I like to think of my self as an average shopper and as much as Target might want to claim boycotts as their downfall, I think it’s just not a fun shopping experience anymore. I know target is constantly coming up with new collections but I think they really need to go back to focusing on the basics because basics are all people are going to buy if the economy dives down.

[papy]

@ModernSwitch

I know target is constantly coming up with new collections but I think they really need to go back to focusing on the basics because basics are all people are going to buy if the economy dives down.

They pivoted effectively during the pandemic, to focusing on household items and necessities; I assume they’ll reapply those strategies.

Honestly, shopping anywhere lately hasn’t really been “fun” for me. Don’t get me started on JoAnn, my previous little escape…