With gas and food prices continuing to rise in the U.S., retail foot traffic is taking a hit and potentially impacting private label sales.
First covered by Store Brands’ sister publication Progressive Grocer, Placer.ai, a retail analytics firm that reports on foot traffic, found that for the week of March 7, overall retail visits were down 4.3% below the same time period three years ago.
“Should current trends continue, the rise in retail gas prices is likely to continue to weigh on overall retail traffic – particularly on those retailers that have greater exposure to lower-income consumers where gas makes up a higher percentage of household budgets,” wrote RJ Hottovy for Placer.ai. “Rising gas prices could cause consumers to consolidate their shopping trips, which would favor superstores and large-format grocers and may even bring a return of mission-driven shopping behaviors. Second, as consumers become more selective with their shopping trips and consciously limit their gas expenditures, trade areas may start to shrink."
While consumers haven’t made a major switch between shopping channels – grocery, superstore and dollar and discount stores – Hottovy predicts that there could be a return to mission-driven shopping trends that favor retailers with an array of goods. The increase in gas prices and subsequent decrease in gas station foot traffic support Hottovy’s prediction.
One warehouse retailer expected to benefit from current retail and gas trends is Costco Wholesale, which is often known for cheap prices at its 640 North American gas stations.
“Foot traffic data indicates that Costco Gasoline bucked the trend and saw a meaningful acceleration in year-over-year visitation trends this past week,” Hottovy wrote. “As elevated gas prices drive consumers to consolidate their shopping trips and turn towards one-stop-shops, Costco seems well positioned to benefit twice from the current situation.”
Issaquah, Wash.-based Costco operates 809 warehouses worldwide. The company, which is No. 4 on Progressive Grocer’s 2021 PG 100 list of the top food and consumables retailers in North America, also has eCommerce sites in the United States, Canada, the United Kingdom, Mexico, Korea and Taiwan.