Big-box giants adapt to shopping shifts and find ways to get customers in their stores

HIGH POINT — A recent white paper from market research firm revealed some interesting trends regarding customer visit patterns at big-box giants Walmart, Costco and Target.

Since each of these retail big boys sells lots of furniture, I thought it would be helpful if I share some of those trends in this column.

Using foot traffic metrics, cross-shopping trends and visitor demographics, the report not only explores how Walmart, Costco and Target have weathered the challenges of the past few years, it also identifies how the visit share across the chains changed, what’s driving that change, how the three brands’ differing target markets affect their competitors and more.

The study says that despite the impact of inflation and higher gas prices that manifested in 2022, an evolving retail landscape and Q2 2023 data indicates that shifting consumer trends may be helping superstores come out on top. 

Different audiences, different competitive landscapes 

Upon analyzing the distinct audience profiles for each chain, the report concludes that while each of these retailers attracts customers with similar median household incomes, they tend to attract different types of retail visitors.

Households in Costco’s captured market have the highest median HHI — perhaps because shopping at Costco requires an upfront membership cost as well as space at home to store bulky purchases. And households in Walmart’s captured market have the lowest median HHI, perhaps thanks to the brand’s focus on low prices. Meanwhile, Target sits in between the two, pointing to its broad appeal and popularity among wide swaths of the population.

Shoppers at Walmart, Costco and Target also tend to have distinct shopping preferences outside these chains as can be seen through the different cross-shopping patterns. For example, Costco shoppers show an affinity for off-price apparel retailers, while Walmart’s clientele embraces the discount hunt at stores like Dollar General and Family Dollar. And Target shoppers tend to frequent beauty destinations like Ulta and Bath & Body Works at higher rates than visitors to the other two chains. 

The study also found the three mega-retailers each exploring new ways to drive traffic to their stores. Some chains have focused on experiential shopping options, and others, like Walmart, are experimenting with design. The chain — known for its warehouse-style layout — recently revamped five of its Supercenters with brighter lights, wider aisles, vibrant displays, and an expanded selection of apparel and home goods, all aimed at appealing to a broader customer base. 

Walmart piloted the new design in Arkansas before expanding to five Northeastern locations — and initial traffic metrics appear promising. H1 2023 visits to the five revamped Supercenters grew by 7.2% YoY, while nationwide visits fell by 0.9% for the same period. And the stores are not only seeing more visitors — comparing the median dwell time at the Supercenters and at typical Walmart stores nationwide suggests that the visitors that are coming to these locations are also staying longer. 

By keeping its retail approach fresh and expanding the rollout of the new format, Walmart may be able to sustain and expand its appeal in an ever-evolving market, the study suggests.

Target has also been enthusiastically experimenting with different formats — the company operates over 200 Super Targets, along with over 150 small-format locations. And now, Target is debuting a new concept — larger-format stores, which are slightly smaller than Super Target venues, but include a larger selection of food and beverages along with more space for back storage and fulfillment relative to a typical Target store.

And customers seem to be embracing both shopping options. Visits to small-format stores outperformed both Super Targets and Targets nationwide on a YoY basis, reinforcing the idea that in retail, sometimes less is more. The success of these smaller, strategic stores hints at the significance of curating the shopping experience to meet customers where they are and provide the experience they need. 

But while many shoppers appear to favor the small-format venues, the data also indicates that some consumers are willing to travel farther to shop at a larger Target. Location intelligence for the first larger-format Target, a 145,000-square-foot store in Katy, Texas, shows that the larger-format venue draws visitors from a much larger trade area — and these visitors also stay longer in the store.  

The larger-format Target’s massive trade area and higher median dwell time suggests that people are excited to visit — and explore — these larger-format stores, and highlights the many ways through which retailers can win at the foot traffic game. With construction on a new larger-format Target set to begin in the fall, it looks like the company feels confident in the store’s potential to continue drawing customers through the doors. 

Walmart, Costco and Target have found ways to thrive in a changing retail landscape. The three companies are keeping visitors coming back by adapting to shifting shopping patterns, experimenting with new store formats, and homing in on their target audiences.

By staying in tune with consumer preferences, these retail giants can hope for continued foot traffic success. And so can you!

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