How Walmart Wins In The ‘Trading Down’ Retailing, Beating Target, And Costco
March 4, 2023
Walmart is the big winner of a “trading down” retail market beating Target and Costco.
In the fourth quarter of 2022, Walmart’s U.S comparable sales grew 8% compared to 6.7% for Costco and 0.7% for Target.
Economists and marketers use the term “Trading down” to describe a shift in consumer spending from discretionary to essential goods to cope with Inflation, which has been squeezing family budgets.
Trading down benefits retailers geared more towards things that consumers must buy, like food, and less on discretionary items like clothing.
Close to 60 percent of Walmart’s sales are in food, so it benefits from this trend.
“Food is important to other retailers like Target and Costco, but they are comparatively more reliant on non-food categories than Walmart,” Guru Hariharan, CEO of CommerceIQ, a billion-dollar E-commerce company, told International Business Times. “Target also looks to be turning a corner but faces additional challenges as it is more reliant on general merchandise categories and discretionary shopping trips altogether.”