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Walmart and Target have weathered many of the same challenges in the post-pandemic economy, from excess inventory to inflation-squeezed customers. But Q2 earnings released this week show their paths diverging to some degree.
The disparity was even greater when it came to digital sales: Walmart gained a whopping 24% and Target fell 10.5%.
So what’s behind Walmart’s growing lead?
As Walmart CFO John David Rainey—clearly feeling himself—told Yahoo Finance on Thursday, “This is not your grandfather’s Walmart.”
But to be a little more precise about it, let’s zero in on one big factor:
That’s the ticket: Walmart may be recovering faster from the drop in ticket sizes that came as cash-strapped consumers shifted their spending away from pricey durable items such as TVs and furniture, as inflation ratcheted up in 2022.
Walmart’s ticket size increased 3.4% in Q2, while Target’s average transaction amount dropped 0.7%.
Christine Short, vice president of research at Wall Street Horizon, told Retail Brew that the disparity in ticket size reflects the fact that while Target and Walmart often get compared, they have different business models. “Walmart is more of a staples-focused business, and Target is more discretionary,” she said.
Right now, she added, “consumers want to feel like they’re getting a deal.”