Walmart and Target Traffic Slumps, Post-Pandemic

After surging through the pandemic, online traffic to many retailers’ websites has slowed, as consumers return to in-store shopping and shift more of their disposable income to experiences. This is true for even some of the largest U.S. retailers, Walmart and Target.

Key Takeaways

• In 1Q22, converted traffic (or traffic that leads to the sale confirmation page) to both target.com and walmart.com fell 5.5% and 4.3%, respectively, from the prior year, according to Similarweb estimates
  • On a sequential basis, converted traffic fell precipitously (39% at target.com and 28.5% at walmart.com) in 1Q22 from 4Q21, due to post-holiday shopping fatigue and the further loosening of pandemic protocols (leading to more in-store activity, which could possibly temper the companies’ overall conversion rate)
• Despite early market share gains for mass merchants, investment in paid search rose significantly  during the pandemic and remains elevated
• Average price per unit (revenue/units sold based on Similarweb Shopper Intelligence) jumped at both Walmart and Target in 1Q22 from the prior year
• Rising inflation, in many cases above wage growth, may lead consumers to trade down, benefiting both Target and Walmart
  • This could mitigate the declines in converted visits and overall web traffic

Fewer Visits Were Converted Post-Holiday in 1Q22

Walmart and Target previously benefited from consumers’ pantry stockings. Topline growth was further aided by the addition of value-added services, including multiple fulfillment and payment options.

In 1Q22, traffic to target.com and walmart.com fell 9% and 5.5% YoY, respectively, according to Similarweb estimates. While the companies have already cycled through the peak pandemic boom, they are now facing pressure from product outages due to supply chain issues and inflation.

The number of converted visits for both companies slid on a year-over-year basis and quarter-over-quarter basis, suggesting fewer consumers are actually making transactions. As depicted in the charts below, converted visits at walmart.com have fallen since 3Q21 on a YoY basis, while visits to target.com were positive until 4Q21. To broaden its customer base and product assortment, Walmart has been investing in its marketplace to better compete with Amazon; this will allow third-party sellers to sell on Walmart’s platform and benefit from fulfillment and other options provided by the retailer. As this ecosystem expands, there could be an improvement in the number of converted visits.

Using Similarweb’s proprietary Shopper Intelligence platform, it’s clear that prices across most common household products have jumped substantially and could be weighing on the number of converted visits. Consumers are purchasing fewer units of products across categories versus the prior year and quarter at both Target and Walmart.

Units sold of groceries rose in low-single digits at Target and Walmart in 1Q22 from the prior year, though the average price per unit sold increased by over 10%. This inflationary pressure will weigh on top-line growth, though these retailers are better positioned than most rivals because of their broad assortments, allowing them to price competitively on certain categories with less impact on margins.

This portfolio strategy is useful, particularly for Walmart, whose lower-wage consumer base could be more negatively impacted by rising prices.

Paid Search Spend Remains Elevated As E-Commerce Penetration Grows

Walmart has maintained higher levels of paid search spend during the post-pandemic era, while Target has significantly cut this investment, with seemingly little impact on its converted visits, which fell in a range similar to Walmart’s on a YoY basis.

Paid search is a small percentage of total sales for both retailers, but the growing spending from Walmart highlights the ongoing and increasing importance of digital marketing and the potentially growing cost of customer acquisition. This will be exacerbated for smaller companies and brands that do not have the same brand and product recognition and who are also facing inflation and supply chain issues.

Conclusion

Relative to other retailers, Walmart and Target could see an upside going forward in 2022, despite slowing converted visits and traffic, as inflation pressures consumers, forcing them to trade down. Technology and process investments to provide a seamless omnichannel experience will also drive sales growth, particularly given that both retailers are destinations that are visited frequently, which is not often the case for other product categories.

In 1Q22, Walmart forecast sales growth of 4%, slightly higher than its full-year forecast of 3%; in 1Q22 same-store sales at Walmart U.S. are expected to be 1% – 2%, as spending from the stimulus is cycled. This will likely be driven by both traffic and price if 4Q21 trends continue. eCommerce made up 13% of Walmart’s U.S. sales in 2021. Target expects low-to-mid single-digit growth in sales in 2022.

The Similarweb Insights Newsroom is available to pull additional or updated data on request for the news media (journalists are invited to write to press@similarweb.com). When citing our data, please reference Similarweb as the source and link back to this post. If we share data before it has been published to the blog, please link to similarweb.com/blog/insights/.

Methodology

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