Walmart Keeps Winning While Costco Stumbles in Its Own Game
As shoppers tighten grocery budgets, Walmart’s value pitch and aggressive promotions have made it a top pick on CNBC’s “Best Stocks” list — while Costco’s stock slips. Here’s why the retail giants are heading in opposite directions.
As consumers cut back on grocery spending, Walmart (WMT) is getting analyst love for its strong stock performance and aggressive promotions — earning a spot on a CNBC “Best Stocks” list. Meanwhile, rival Costco (COST) is seeing its shares slide. As of after-hours trading July 17, Walmart shares closed at $114.24, down 0.62% from the prior close.
- Walmart (WMT) was named to CNBC analyst Josh Brown’s “Best Stocks” list, with shares continuing to rise while Costco (COST) shares fell.[CNBC]
- U.S. grocery unit sales fell 1.8% YoY in June, as inflation-weary shoppers bought fewer items and traded down to cheaper brands.[CNBC]
- Grocery prices are roughly 33% higher than in 2019, pushing consumers to buy less, hunt for discounts, and switch to private labels. Retailers and food companies are ramping up promotions and price cuts.[CNBC]
- Walmart and Kroger are among the retailers leaning into promotions, price cuts, and value messaging to navigate the industry’s shift from “dollar growth” to “unit growth.”[CNBC]
- Retail media networks are evolving beyond data-driven ads into creative services and branded content, with Walmart and Amazon (AMZN) rolling out new formats.[ADWEEK]
U.S. consumers are pulling back on grocery spending, and that shift is redrawing the retail winners and losers. According to Bain & Company, June grocery unit sales fell 1.8% year over year, as inflation squeezed shoppers into buying less and switching to cheaper brands.[CNBC] Against that backdrop, Walmart (WMT) — with its strong value proposition and aggressive promotions — was named to CNBC analyst Josh Brown’s “Best Stocks” list, and its shares have been climbing while rival Costco (COST) lags.[CNBC] As of after-hours trading July 17, Walmart shares closed at $114.24, down 0.62% from the prior close of $114.95. During the session, the stock opened at $116.96, hit a high of $118.09, and touched a low of $113.60.
Walmart’s “Best Stocks” Halo and Costco’s Relative Slide
CNBC analyst Josh Brown recently highlighted Walmart (WMT) as a member of his “Best Stocks” list, noting its continued strong share performance while Costco (COST) shares have fallen.[CNBC] Brown recalled that earlier this year, the team discussed Target’s (TGT) severe underperformance versus Walmart and whether Target could catch up once its earnings growth story materialized.[CNBC] “We nailed that call,” he said.[CNBC] The implication: Walmart may be better positioned than Costco to attract inflation-weary shoppers hunting for value.
Costco (COST), meanwhile, reported June sales on July 8. Net sales for the five weeks ended July 5 came in at $29.24 billion, up 10.6% from $26.44 billion a year earlier.[GlobeNewswire] Despite double-digit sales growth, the market’s reaction was tepid — shares even slipped — suggesting investors may be focused on growth quality or future earnings expectations.
Consumers Tighten Belts: Grocery Industry Faces Volume Decline
American shopping habits are changing. According to CNBC, June grocery unit sales fell 1.8% year over year — a drop that outpaced food inflation.[CNBC] Grocery prices are now roughly 33% higher than in 2019, forcing consumers to buy less, switch to cheaper store brands, and hunt for deals.[CNBC] That trend is pressuring food companies and retailers to adapt.
CNBC’s Brandon Gomez noted in a video report that Americans are cutting grocery spending, reshaping the winners and losers in the food aisle.[CNBC] To combat volume declines, companies like PepsiCo (PEP), Walmart (WMT), and Kroger (KR) are ramping up promotions, price cuts, and value offerings, as the industry shifts from a “dollar growth” to a “unit growth” mindset.[CNBC]
Retail Media’s New Frontier: From Data-Driven to Content-Driven
As consumer behavior shifts, retail media networks are also evolving. According to ADWEEK, after years of touting precision targeting with shopper data, retail media sellers like Albertsons and Walmart are updating their pitch — now offering creative services.[ADWEEK] These services include updated creative formats and, in the most ambitious cases, branded content.
For example, Albertsons partnered with Procter & Gamble (PG) in June to launch its first branded content series — a 22-episode show called “Rico’s Tacos” that leverages the retailer’s consumer data.[ADWEEK] Meanwhile, Instacart recently launched Instacart Ads Studio, a creative services unit designed to help consumer goods companies co-create ads for its platform.[ADWEEK] According to ad buyers, Walmart and Amazon are also offering eye-catching creative ad formats.[ADWEEK] Still, some buyers question whether branded content might dilute the core value proposition of retail media networks: driving sales.[ADWEEK]
Industry Moves: Instacart Acquisition and Macro Data
On the M&A front, grocery tech company Instacart announced the acquisition of Arpalus, a computer vision firm that develops shelf-intelligence technology for grocery retail. Financial terms were not disclosed.[FreshPlaza] The deal aims to bolster Instacart’s real-time shelf-intelligence capabilities for retailers and brands.
On the macro front, the Bureau of Labor Statistics reported that the Consumer Price Index for All Urban Consumers (CPI-U) fell 0.4% in June on a seasonally adjusted basis, after rising 0.5% in May. The fruits and vegetables index declined 0.2% month over month.[FreshPlaza] Easing inflation — especially in food prices — may offer some relief to consumers, but the volume decline trend persists.
Sources
- CNBC — This retailer on Josh Brown's Best Stocks list continues rising while its biggest rival falls
- CNBC — U.S. grocery slowdown deepens as shoppers buy fewer items, raising pressure on food companies
- CNBC — Americans are buying fewer groceries. Here’s how that’s changing the winners and losers in the food aisle
- ADWEEK — Retail Media’s Next Evolution: Getting Into Content
- FreshPlaza — Instacart has announced its acquisition of Arpalus
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