Walmart and Target executives claimed that the companies’ recent quarterly earnings reports indicated that consumers have been trading down to cheaper options over the first three months of 2023.
As Walmart CEO Doug McMillion told investors in an earnings call, the retail giant saw a rise in grocery sales over the first quarter, particularly among high earners and a younger demographic. The company’s same-store sales in Q1 topped analysts’ estimates, with its strength in grocery as well as health and wellness managing to offset a slide in general merchandise sales.
Target’s Q1 results follow this narrative, with CEO Brian Cornell making the following statement on a call with reporters: “(Consumers are) investing more in those household essentials and food and beverage items, and they’re shopping more cautiously when it comes to all things discretionary.”
Due to a higher focus than Walmart on general merchandise and less on groceries, Target’s earnings report was less optimistic, with a low-single-digit decline in sales. On the eCommerce front, Target’s online sales declined for a second straight quarter, while Walmart’s skyrocketed by 26%.