Grocery Foot Traffic is Walmart’s Secret, Says Analyst

Foot traffic has been the secret, says Tim Lesko of Granite Investment Advisors. Walmart a couple dozen years ago moved into grocery and that move, which was widely panned at the time, has really led ...
Grocery Foot Traffic is Walmart’s Secret, Says Analyst
Written by Rich Ord

“Foot traffic has been the secret,” says Tim Lesko of Granite Investment Advisors. “Walmart a couple dozen years ago moved into grocery and that move, which was widely panned at the time, has really led foot traffic to stay steady. You’re still seeing same store sales growth in a retail industry that is really really under a lot of pressure. Stores that are able to maintain foot traffic, people that are going for grocery and then buying other goods, really creates a strong backdrop against other retailers.”

Tim Lesko, partner at Granite Investment Advisors, discusses how foot traffic driven by their grocery business is key to Walmart’s continued growth in an otherwise difficult retail sector:

Grocery Foot Traffic is Walmart’s Secret

There are two things that are most important to us. One is that Walmart a couple dozen years ago moved into grocery and that move, which was widely panned at the time, has really led foot traffic to stay steady. You’re still seeing same store sales growth in a retail industry that is really really under a lot of pressure. So pretty happy to see that even though same store sales were a little light compared to street estimates, they were still positive. 

Second is the online business. They continued to spend a lot of money and have done a really good job of growing that online business. People fail to recognize that they’re the second largest online retailer in the US. 

Foot traffic has been the secret. Stores that are able to maintain foot traffic, whether they be stores that are people hunting for bargains in the TJ Max’s of the world or people that are going for grocery and then buying other goods really creates a strong backdrop against companies like Pier 1 which went bankrupt over the weekend. You’re seeing bankruptcies all over the landscape. You have to drive foot traffic. 

Multiple Revenue Streams Makes Amazon a Difficult Competitor

Multiple revenue streams is why Amazon is such a difficult competitor. They have businesses outside of their core retail business that really drive the profits and they continue to sell goods at a loss online. But interestingly, you have Amazon that’s moving from being a virtual merchant to now a bricks and mortar merchant, getting into grocery, getting into daily distribution of goods to people. 

Walmart’s been doing that for years and has all of the goods in your geography. In the future world of same-day delivery and next day delivery, Walmart’s very well-positioned to provide that service. It’s almost like they’re both heading towards the same way but with Walmart at a much better valuation.

Grocery Foot Traffic is Walmart’s Secret, Says Analyst

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