Inflation pushes budget shoppers away from Walmart. Luring them back not easy, say experts

Inflation remains at a 40-year high, devouring a large chunk of the grocery budgets of many Americans, especially Walmart's legions of cost-conscious shoppers.

Walmart Inc WMT.N could face an uphill battle to reclaim U.S. shoppers who opted for the neighborhood dollar store or Aldi rather than driving farther to a Walmart Supercenter when gasoline was $5 a gallon.

While gasoline prices have dropped nearly 20% over the past month, there are no signs shoppers are returning to the nation’s biggest retailer, according to foot traffic data reviewed by Reuters and analysts.

Inflation remains at a 40-year high, devouring a large chunk of the grocery budgets of many Americans, especially Walmart’s legions of cost-conscious shoppers.

Foot traffic at Walmart’s 3,573 U.S. Supercenters and its 370 discount stores (as of Jan. 31, 2022) fell 2.7% on average from June 1 through July 25 versus a year earlier, according to data from Placer.ai, a location analytics firm.

Meanwhile, traffic rose 11.5% at Aldi ALDIEI.UL, owned by German discount grocer Aldi Süd, and the number of shopper visits climbed 4.1% at Dollar General.

The question of how to reverse the loss in foot traffic will likely be a focus for analysts when Walmart reports second-quarter earnings on Aug. 16.

It may not be easy – or cheap.

Burt Flickinger, managing director of Strategic Resource Group, said Walmart needs to invest more in local advertisements to lure people back into stores.