Consumer Spending Trends: Impact on Retail Giants

Economic Conditions and Consumer Spending

Economic conditions, including inflation, interest rates, and geopolitical uncertainties, are impacting consumer spending patterns. Retail giants like Walmart, Costco, Amazon, Target, and Home Depot report consistent economic conditions but note concerns over inflation, high interest rates, and shifts towards services, affecting discretionary spending and home improvement demand.

"Consumer economic conditions have been relatively consistent since the start of the year." --- (WMT, earning call, 2025/Q1)

"These risks and uncertainties include, but are not limited to, domestic and international economic conditions, including exchange rates, inflation or deflation, the effects of competition and regulation, uncertainties in the financial markets, consumer and small business spending patterns and debt levels, breaches of security or privacy of member or business information, conditions affecting the acquisition, development, ownership or use of real" --- (COST, press release, 2024/07/10)

"Our results are inherently unpredictable and may be materially affected by many factors, such as fluctuations in foreign exchange rates, changes in global economic and geopolitical conditions and customer demand and spending (including the impact of recessionary fears), inflation, interest rates, regional labor market constraints, world events, the rate of growth of the internet, online commerce, cloud services, and new and emerging technologies, and the various factors detailed below." --- (AMZN, press release, 2024/04/30)

"And even as inflation moderates and we see sequential improvement in discretionary category trends, higher interest rates, uncertainty around the future of the economy, continued social and political divisiveness and the upcoming election cycle have consumers concerned about what lies ahead." --- (TGT, earning call, 2025/Q1)

"The decrease in comparable customer transactions reflects the impact of macroeconomic factors, including the continued shift in consumer consumption trends away from goods and towards services and the impact of a high interest rate environment, pressuring home improvement demand." --- (HD, sec filing, 2024/Q1)

Current Consumer Spending Patterns

Current consumer spending patterns show a strong inclination towards home deliveries, healthy base spending, and debt-financed larger projects. Retail giants like Lowe's and Home Depot highlight robust consumer insights and spending health, while Target and Costco observe consumer responses to new products and market share gains.

"Lowe's being extraordinarily well run company and leading home improvement chain, I think has a very good understanding of consumer spending insight in consumer spend." --- (LOW, conference, 2024/06/26)

"And so, more and more customers are taking deliveries at home. And then what we see is, after the 4th delivery, especially for customers who shop stores and deliver, after the 4th delivery, we see the patterns" --- (WMT, conference, 2024/06/11)

"And so I'd say kind of the base of customer spending is very healthy. When you get to larger ticket projects and for us, when you're thinking about a project associated with your home, the larger they get, the more likely they are to be debt financed." --- (HD, conference, 2024/04/04)

"So it sounds like your consumers are responding to newness in the box. Just curious how you're feeling about the level of newness innovation for balance of the year." --- (TGT, earning call, 2025/Q1)

"In other words, are you gaining share and that's what's really driving your improvements in some of these categories like electronics and appliances and big ticket rather than the consumer actually getting better." --- (COST, earning call, 2024/Q3)

Shifts in Consumer Behavior

Retail giants are observing notable shifts in consumer behavior. Walmart reports a move from general merchandise to food purchases. Home Depot highlights the impact of higher interest rates and changes in home sales on consumer spending. Lowe's successfully adapted its strategy to changing customer behavior, maintaining profitability despite margin pressures.

"Well, as a percentage of the basket consumers are buying, we've certainly seen a shift from general merchandise to food." --- (WMT, conference, 2024/06/25)

"And you mentioned the lockup effect, just simply don't know. Is it a factor of folks waiting for rates to decline or is there a mindset shift that becomes accustomed to a higher rate environment and says this is normal, I have to upsize, I have to improve in place." --- (HD, conference, 2024/04/04)

"Brandon Sink: Yes, Michael, I would just add, as Marvin said, we were really pleased with our ability to pivot our go-to-market strategy, especially as we saw customer behavior start to change over the back half of last year and our execution, our marketing approach, how we highlighted value, we believe, helped us win Q1, and we did see a little bit of margin pressure from those actions, but really pleased that we were able to manage that and offset that within SG&A and still deliver the bottom line number and I think confident that we can manage the portfolio as we move through the balance of the year." --- (LOW, earning call, 2025/1-24)

"So I'm going to maybe start going to John David and saying, everybody always wants to know how our consumers feeling generally out there, Any changes in behavior?" --- (WMT, conference, 2024/06/25)

"There is no doubt that when you see significant shifts in existing home sales from year to year, that's going to have an influence." --- (HD, conference, 2024/04/04)

Impact of E-commerce on Retail Giants

Retail giants like Walmart, Costco, and The Home Depot are experiencing significant e-commerce growth. Walmart's e-commerce sales surged by 22%, Costco's by 15.3%, and The Home Depot is expanding its online capabilities to enhance customer experience. This shift underscores the critical role of e-commerce in driving retail performance.

"Walmart U.S. also delivered better than expected growth with comp sales up 3.8%, including strong e-commerce growth of 22%, led by store-fulfilled pickup and delivery, marketplace, and advertising." --- (WMT, earning call, 2025/Q1)

"Comparable sales were as follows: 4 Weeks 35 Weeks U.S.5.8% 4.1% Canada5.2% 7.7% Other International5.1% 9.1% Total Company5.6% 5.2% E-commerce14.6% 14.7% Comparable sales excluding the impacts from changes in gasoline prices and foreign exchange were as follows: 4 Weeks 35 Weeks U.S.5.2% 4.4% Canada5.9% 8.2% Other International7.0% 7.8% Total Company5.5% 5.3% E-commerce14.8% 14.6% This year's retail month of April was impacted by the shift in timing of Easter." --- (COST, press release, 2024/05/08)

""Our brick-and-mortar stores are foundational to The Home Depot, and expanding our e-commerce capabilities is a key part of our ongoing efforts to deliver a seamless interconnected experience," said The Home Depot's Jordan Broggi, President - Online." --- (HD, press release, 2024/05/23)

"Strength was broad-based, led by Walmex, China, and Flipkart. Results for the quarter included strong growth in e-commerce, led by store-fulfilled orders and marketplace." --- (WMT, earning call, 2025/Q1)

"As reported in our release, net sales for May came in at $19,640,000,000 an increase of 8.1% from 18.16 $1,000,000,000 last year. Reported comparable sales for May were as follows: in the U. S. 5.8%, in Canada 6.7%, other international 9.3%, total company 6.4%, e commerce 15.3%." --- (COST, event transcript, 2024/06/05)

Technological Innovations in Retail

Retail giants are leveraging technological innovations to enhance customer experiences and optimize operations. Walmart's Sam's Club uses AI-powered exit technology and digital solutions, Lowe's offers innovative products like SmartStow, Costco explores buy online pickup in-store and data monetization, The Home Depot partners with Google Cloud for AI capabilities, and Amazon collaborates with NVIDIA to advance Generative AI.

"The move to use technology innovation to drive a better member experience builds on Sam's Club's existing innovative digital solutions, such as Scan & Go™ which the company believes is the most used mobile application in a retailer and/or restaurant in the United States, to provide members with a more convenient shopping experience and differentiate itself as the retail industry's innovation leader." --- (WMT, press release, 2024/04/30)

"Lowe's now offers the largest selection of Toro products of any national retailer with innovations like SmartStow, which allows owners to store their mower upright, reducing the storage footprint by up to 70%, including patented Briggs & Stratton technology, so it doesn't leak oil when stored in this position and with personal pace, a best-in-class self-propelled system that propels the mower at the speed the user is walking." --- (LOW, earning call, 2025/Q1)

"Michael Lasser: My follow-up question is, given some of the changes in leadership over the last year or so, is there any thought given to being more aggressive with some of the evolution on the model, things like buy online pickup in-store, deploying more technology in the store or capitalizing on the ever so great amounts of data that Costco has in the form of trying to monetize it through retail media. Thank you very much." --- (COST, earning call, 2024/Q3)

""Our technology team looks forward to continuing to work closely with Google to remove friction for our customers when they shop with us and to stay on the cutting edge of retail technology." The extended partnership with Google Cloud announced today involves The Home Depot accessing Google Cloud's AI capabilities to enhance the customer experience and optimize operations." --- (HD, press release, 2024/04/11)

""I think that just gives us the ability to get closer to customers." The announcement came within a couple weeks of an announcement by Amazon it would be extending its collaboration between AWS and NVIDIA to advance Generative AI innovation." --- (AMZN, press release, 2024/04/16)

Consumer Sentiment and Confidence

Consumer sentiment and confidence are on the rise, as evidenced by Target's significant increase in social sentiment and positive consumer response. Walmart also expresses strong confidence in its future business prospects, reflecting a robust consumer sentiment. Both retail giants are experiencing favorable consumer engagement and optimism.

"Social sentiment is up compared to a year ago, and mentions of Target Circle on social platforms increased by more than 500% versus last year, boosted by our immensely popular marketing campaign featuring Saturday Night Live alum, Kristen Wiig, revisiting her role as the Target Lady." --- (TGT, earning call, 2025/Q1)

"We feel really good about the business, the momentum that we have. Not every quarter will be as good as the last quarter, but we've got a lot of conviction and confidence in the future." --- (WMT, event transcript, 2024/06/07)

"Christina will provide more detail in a few minutes, but we are really pleased with the consumer response we've seen so far." --- (TGT, earning call, 2025/Q1)

"Chris Horvers: Thanks. Chris Horvers, JPMorgan. So I'm surprised we got here without a question about the U. S. Consumer. So maybe could you share your thoughts?" --- (WMT, event transcript, 2024/06/07)