Customers Who Flocked to Big-Box Stores Now Staying Away: Will They Return?

Walmart Inc.

We’ve all seen the photos of customers pushing shopping carts laden with toilet paper and other items across store parking lots as people prepare to hunker down in response to stay-at-home orders imposed to slow the spread of COVID-19. Big-box stores like Walmart Inc.’s (NYSE: WMT) Sam’s Club outlets and Costco Wholesale Corp. (NASDAQ: COST) saw big traffic spikes in the first week of March as Americans stocked up.


By the third week of March, however, traffic had declined sharply at the warehouse stores, and at Walmart and Target Corp. (NYSE: TGT) stores as well. Sam’s Club stores saw a spike in year-over-year traffic of nearly 67% in the second week of March that dropped to an increase of 21.4% in the third week. And that was the best performing big-box store.

Traffic at Costco, Walmart and Target dropped sharply year over year, likely due to people either choosing to or being ordered to stay home.

The following chart from research firm shows store traffic for all four stores for the four weeks through March 20.

Is the decline temporary and will traffic pick up again once people need to restock? Or is there something else going on?

Unsurprisingly, Americans are turning to online sources like Inc. (NASDAQ: AMZN) and the big-box stores’ own websites to order more supplies. A survey by research firm ShipStation revealed that one in five consumers is now shopping online more. That strains the supply and delivery chain, and online sellers have had to adapt.

After the early spike in sales, warehouse store traffic slowed more in the fourth week in parts of the country hit harder by the coronavirus outbreak. researchers commented:

[T]he data indicates that as the situation improves, and doesn’t worsen, consumer behavior tends to return to more normal patterns. Should this trend hold, it’s a very strong endorsement for those who believe that wider retail activity could quickly return to previous levels should the preventative measures being enacted serve their ultimate goal.

By early March some 20% of consumers had already had an e-commerce delivery delayed due to the coronavirus outbreak. While Americans are willing to be patient, a ShipStation survey shows that there are limits:

Consumers say if delivery was delayed or canceled due to COVID-19, 84% need proactive and transparent communication about the delay, and 81% want the ability to cancel an order altogether. 70% want an extended returns window to accommodate the delayed delivery, and 34% say they want a discount to apply to the next order.

The big unanswered question is whether customers will return to the brick-and-mortar stores when (or if) the online offers of delivery, curbside pickup and other programs remain once the stay-home orders are lifted.

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