Higher gas prices are taking a toll on retail foot traffic
Yahoo Finance’s Brooke DiPalma details rising gas prices’ impact on foot traffic in retail stores, decreased grocery store visits, and a decline in stops to gas stations.
Video transcript
– Higher gas prices are taking a toll on retail, according to a new report from Data Intelligence platform, Placer.ai. Our very own Brooke DiPalma is here with the details. Brooke, what can you tell us?
BROOKE DIPALMA: Rachelle, well, it really is the perfect storm hitting retailers right now. It’s the Ukraine-Russia war supply chain strain and that ongoing inflation on both food and gas prices. Just today, prices at the pump are beginning to see a bit of relief here. According to AAA, the current national average of gas is about $4.25. Now, according to Placer.ai, that price per gallon is still $1.37 higher than a year ago.
Now, if you take a look at retail foot traffic, weekly visits, according to Placer.ai, during the week of March 7, visits to US retailers decreased by about 4.3%. That’s compared to three years ago in the year of 2019. But this marks the steepest decline of weekly foot traffic visits over the past 12 months that were not directly correlated with the impact of COVID-19 or the influx of the holidays.
Now, Rachelle, a lot of questions have been asked if these higher prices have led to more visits to discount or Dollar Tree stores. But Placer.ai found that it, in fact, did not have a meaningful shift here. They found that, over the past week of February 28 to March 7, all three categories– grocery stores, superstores like Walmart and Target, in addition to discount and dollar stores, saw low single digit growth compared to 2021.
Then during the week of March 14, visits to grocery stores and discount stores were slightly up, while superstore visits were slightly down. But like I said, not a meaningful shift here to contribute– or conclude that people were jumping to discount and dollar stores here. But all these major headwinds certainly taking a toll on visits to retailers here in the US.
– Now, it’s interesting because one big-box retailer seems to be benefiting from the current events, according to the report. Break down which one and why.
BROOKE DIPALMA: Rachelle, that’s right. Costco, a big winner here. They noted that they really are the one stop shop. It’s food. It’s consumer product goods. And it’s also those Costco gasoline locations that are really bringing in the big bucks here. When a consumer has to use their membership card in order to take advantage of these gasoline prices, visits are certainly going up.
In addition to that, Costco notes on its site that they use their Costco approach in order to help fuel demand here, just as the same as the inside of the warehouse. High volume and low prices are the way to go here at these Costco gasoline locations. To note here, there are 640 gas stations in North America Costco locations. So the major retailer did see that jump of 159.6% in foot traffic during the week of March 7.
But this is not directly translating to investors on Wall Street. Year-to-date, it’s down about 1.4%. But worth noting, compared to a year ago, it’s up 59%. And so it’s certainly a trend to keep watching as these memberships drive people to Costco, and also these customers are more inclined to get their gas at Costco and perhaps lead to other trips while they’re there. That one stop shop really benefiting Costco here.
– Indeed. Thank you for that update. Yahoo Finance’s own Brooke DiPalma there. Thank you so much.
