money Gas prices seem to be hitting retail foot traffic, Placer.ai data finds
Higher gas prices may be taking a toll on retail foot traffic, according to a new report from data intelligence platform Placer.ai.
Though prices at the pump have begun to decrease, with a current national average of $4.25, the price per gallon is still $1.37 higher than a year ago amid the Ukraine-Russia war and other supply-chain issues. Now, combine that with elevated food prices and it appears that consumers are making fewer visits to retailers, according to Placer.ai's analysis.
During the week of March 7th, visits to U.S. retailers decreased by 4.3% compared to the same week three years ago, marking the steepest decline in weekly foot traffic over the past 12 months that were not correlated with the impact of COVID-19 or the holidays. If gas and food prices remain high, Placer.ai warns that retailers with higher exposure to lower-income consumers for which gas makes up a larger portion of the household budget, may face ongoing impact.
Consumer spending momentum
During the weeks of February 28th and March 7th, 2022, grocers, superstores, mass merchants like Walmart (WMT) and Target (TGT), and discount and dollar stores saw low-single-digit growth in foot traffic, compared to a year ago. During the week of March 14th, visits to grocery stores, discount, and dollar stores were up slightly less than 5 percent, while visits to superstores were slightly down.
In the report, Placer.ai noted that there was not a "meaningful shift" between shopping channels, and consumers are not "trading down from mass merchants and grocery stores in favor of dollar stores."
Placer.ai's RJ Hottovy noted that with higher gas prices, "mission driven shopping trends" may return, which "buoys" retailers with larger basket sizes and longer visits at the expense of visit numbers.
Costco positioned to benefit, Placer.ai suggests
According to Placer.ai's National Gas Station Index, overall visits to gas stations decreased in recent weeks compared to momentum in early 2022. On the other hand, Costco's (COST) one-stop-stop with multiple offerings like gas, groceries and consumers goods allowed it to "benefit twice from the current situation."
With 640 gas stations in North America at Costco locations, the mega retailer saw an increase of 159.6% in foot traffic during the week of March 7, 2022, which was the highest jump since September 6th, 2021.
"Foot traffic data indicates that Costco Gasoline bucked the trend and saw a meaningful acceleration in year-over-year visitation trends this past week," Placer.ai's RJ Hottovy noted.
Compared to a year ago, shares of Costco are up nearly 59 percent.
Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma or email her at bdipalma@yahoofinance.com.
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