After Major Layoffs, How Are Retailers Faring in Business and with Consumers?

November 7, 2023

In recent years, layoffs have become increasingly common in the retail industry. This trend began during the early stages of the pandemic, when numerous retailers had to reduce their operating hours, budgets, and consequently, workforces. Major nationwide layoffs in the retail industry have continued into 2023 as many companies adopt cost-saving measures in the wake of post-pandemic economic challenges. So, after major retailers like Walmart and Dollar Tree implemented layoffs, has consumer interest in retail stores like these grown or diminished? Does declining foot traffic correlate with budget cuts and layoffs?

A young woman holds a shirt, shopping in a clothing store

To learn more about the performance of these businesses, consumer interest in these brands, and the broader retail landscape, we examined year-over-year consumer foot traffic data to several retailers that carried out employee layoffs in 2023. Here’s what we found.

Foot Traffic to Daily Needs Stores

We analyzed foot traffic to three major retailers for daily needs products: Walmart, CVS Pharmacy, and Dollar Tree. As of Q2 2023, Dollar Tree experienced a 7% increase in year-over-year foot traffic, and CVS experienced a modest 1% increase. Meanwhile, Walmart saw the greatest drop in foot traffic, with a 24% decrease year-over-year. Over the past year, each brand followed similar foot traffic trends. However, Dollar Tree and CVS were able to better attract and sustain foot traffic, compared to Walmart.

Consumers may prefer stores like CVS because the chain offers the advantages of smaller, easily accessible locations, an extensive range of health and wellness products, and specialized pharmacy and healthcare services—a unique combination that larger retailers like Walmart may not be able to match. Consumers may also be opting to shop at Dollar Tree for other daily needs due to economic challenges and tightening budgets as a result of high inflation. While still affordable, Walmart and CVS are comparatively pricier than Dollar Tree’s highly discounted products.

Are economic challenges affecting consumer interest in retail stores in other categories? To learn more, we analyzed foot traffic to department stores, where price points are often higher than at daily needs stores.

Foot Traffic to Department Stores

We examined foot traffic to major department stores that conducted employee layoffs, including Neiman Marcus, Nordstrom, and Kohl’s, to learn more about current consumer trends. Over the last year, all three department stores have experienced both ups and downs in consumer foot traffic. Foot traffic increased from Q2 2022 to Q3 2022 before declining significantly in Q4 2022. After increasing again into Q1 2023, foot traffic to Neiman Marcus, Nordstrom, and Kohl’s declined once more into Q2 2023.

As of Q2 2023, Kohl’s experienced an 8% year-over-year increase in foot traffic, while Neiman Marcus and Nordstrom saw declines of 16% and 7%, respectively. While all three followed similar foot traffic trends for the period analyzed, the difference in year-over-year growth suggests evolving consumer preferences. In 2023, consumers may prefer the value and budget-friendly options at Kohl’s over the pricier offerings at Nordstrom and Neiman Marcus. This trend aligns with the current economic climate, marked by high inflation and interest rates.

Foot Traffic to Specialty Retailers

To learn even more, we analyzed foot traffic to specialty retailers, including Dick’s Sporting Goods, Bed Bath & Beyond, David’s Bridal, and REI. From Q2 2022 to Q2 2023, foot traffic to specialty retail stores followed similar trends to department stores, showcasing dramatic ups and downs in foot traffic over the last year. Q4 2022 was marked by dramatic declines in foot traffic across the board, with swift upturns into Q1 2023. However, during Q2 2023, consumer foot traffic to the specialty retail stores we analyzed once again declined. 

Overall, Dick’s Sporting Goods saw an impressive 41% year-over-year surge in foot traffic, whereas Bed Bath & Beyond experienced a more modest 3% increase, likely driven by its going-out-of-business sales. In contrast, David’s Bridal saw a 15% decline, and REI experienced a substantial 22% drop. These numbers further illustrate the overarching trend of consumers looking to spend wisely by placing a higher value on affordable offerings.

For example, Dick’s Sporting Goods offers a wide range of sports and fitness-related products, which can be more appealing to consumers looking for ways to stay active and healthy without spending too much. In contrast, REI specializes in recreational gear, with a strong emphasis on products for hiking, camping, climbing, cycling, and other outdoor activities. These products may come at a higher price point and could be considered non-essential during tough economic times. Furthermore, the declining foot traffic at David’s Bridal locations emphasizes the decreasing demand for wedding-related products, which may also be due to consumers scaling back on expensive endeavors, like weddings, to save money during this time.

Consumer Interest in Retail Stores in 2023

Over the last year, retailers of all types have faced tough times marked by increased layoffs as they navigate economic uncertainties and other challenges. Consumers have also been facing a challenging year as they grapple with high inflation and skyrocketing interest rates. It’s evident that economic disruptions are having major effects on consumer preferences, trends, and foot traffic.

Stores like Dollar Tree and Kohl’s, known for their affordability and value, are attracting more shoppers seeking savings. In contrast, more upscale and high-end retailers are seeing declines in foot traffic. These trends emphasize the importance of adaptability and understanding the evolving consumer landscape in today’s retail industry. Not only are consumers demonstrating an increased preference for cost-conscious spending, but they also have higher expectations of retail brands. Retailers who can align with these changing consumer needs and preferences will continue to attract shoppers and see success in 2023 and beyond.

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