Cost-conscious and cash-strapped consumers prioritized value when visiting the nearby shopping mall or logging into their preferred digital destination.
Throughout 2024, various surveys revealed that many consumers were financially anxious, cautious, and uncomfortable. A recent NerdWallet survey found that a majority of Americans had money regrets over the past 12 months.
As shoppers grappled with an elevated cost of living, whether housing affordability challenges or high food prices, they sought discounts, savings, and cheaper alternatives.
Retail executives revealed these observations to shareholders and market analysts.
“Consumers tell us their budgets remain stretched, and they’re shopping carefully as they work to overcome the cumulative impact of multiple years of price inflation,” Target CEO Brian Cornell said during a quarterly earnings call last month.
“They’re becoming increasingly resourceful in their shopping behaviors, waiting to buy until the last moment of need, focusing on deals and then stocking up when they find them.”
Dollar General CEO Todd Vasos agreed that value is now the name of the game.
“They’re buying very close to need and being very selective at the shelf,” he said during the third-quarter earnings call on Dec. 5. “The consumer is seeking value, trying to make ends meet. The last weeks of the month are some of our weakest.”
Even fast-food giants have accepted they are engaged in a “street-fighting mentality” as they compete for a shrinking number of patrons.
“Clearly everybody’s fighting for fewer consumers or consumers that are certainly visiting less frequently, and we’ve got to make sure we’ve got that street-fighting mentality to win, [regardless] of the context around us,” McDonald’s CFO Ian Borden said on the company’s conference call this past spring.
In this economic environment, there were clear winners and losers.
The Losers
According to S&P Market Intelligence data, through Dec. 17, 33 bankruptcy filings of public and private retail companies occurred in 2024. This is the highest total since 2020 and the second-highest number since 2017.
Scores of other well-known brands announced store closures in the past year.
Coresight Research data show that retail recorded more than 7,300 store closures in 2024, up 58 percent from a year ago. Discount stores, home and office supply chains, and drugstores led the shutters.
Discount retail chain Big Lots filed for Chapter 11 bankruptcy protection in September and confirmed batches of store closures, though it was able to keep hundreds open.
Family Dollar and Dollar Tree aim to shut down close to 1,000 stores nationwide.
Pharmacy behemoths CVS and Walgreens have shuttered and plan to close hundreds of stores in the United States, with experts describing the trend as a pharmacy desert appearing across the country.
Apparel retailer Rue201 plans to close all 540 locations, totaling 2.7 million square feet of retail space. Macy’s, as part of its initiative to streamline operations, closed about 65 stores.
Shoppers walk into a Macy's department store at Miami International Mall in Doral, Fla., on Feb. 22, 2021. Wilfredo Lee/AP Photo
In the food business, Denny’s, Red Lobster, TGI Fridays, and Wendy’s have and will continue to close many stores in the United States.
Many corporate giants have endured a plethora of issues in 2024.
Slumping revenues, declining profits, weakening customer traffic, and tumbling store sales defined the year for Starbucks.
Company executives and market analysts attributed the coffee giant’s issues to confusing menus, in-store delays, and technical glitches with its mobile app. The high cost of coffee may also contribute to Starbucks’s challenges.
A recent survey by Technomic, a food service research group, found that Starbucks was perceived as the least affordable of the seven top coffee brands. At the same time, Tim Hortons held the title for the most affordable.
Brian Niccol, the new chairman and CEO, is optimistic that Starbucks can overcome these hurdles.
“We know how to make these improvements, and when we do, we know customers will visit more often,” he said in an October video message.
Yet managing the cost of a cup of coffee might be more challenging than expected, given that coffee futures have surged by 67 percent this year.
Despite cutting prices and expanding its private label line, Target registered its largest earnings miss in two years in the third quarter. The company also trimmed its full-year guidance and could wrestle with stiff headwinds should the incoming administration follow through on sizable tariffs on Chinese imports.
Target’s stock tumbled by more than 5 percent in 2024.
Winners
The National Retail Federation, the world’s largest retail trade association, recently published a list of companies that generated the most revenue in 2024.
In the United States, the top three companies were Walmart, Amazon, and Costco.
Why have Walmart shares jumped by about 70 percent this year? Groceries, a solid digital platform, and lower prices have ostensibly been behind the retailer’s success in 2024.
Groceries account for 60 percent of Walmart’s business, a strategy that has shoppers visiting for apples and apricots and staying for appliances and apparel.
Walmart’s e-commerce business has grown fivefold since 2017. In the third quarter, online U.S. sales increased by 22 percent.
“Growth in customer transactions and units across stores and e-commerce remained strong,” CFO John David Rainey told investors on the November earnings call. “Store-fulfilled delivery increased nearly 50 percent and surpassed $2.5 billion monthly run rate. We’ve now had 12 consecutive months of deliveries above $2 billion.”
The country’s largest retailer promised to lower its prices this past summer, particularly for food.
“As it relates to value, we’re lowering prices,” Walmart president and CEO Doug McMillon said in the second-quarter earnings call in August.
In recent months, concerns arose about Costco’s stability. The company revealed adjustments, such as tighter entry regulations and increased fees. In addition, there were rumors about a potential price hike for its famous $1.50 hot dog and soda combo.
“To clear up some recent media speculation, I also want to confirm the $1.50 hot dog price is safe,” Costco CFO Gary Millerchip said in May.
With better-than-expected earnings this year, Costco’s membership model, so-called treasure hunt experience, and competitive prices attracted shoppers.
Behind the scenes, operational efficiency and inventory management have helped leverage “its enormous buying power,” says retail strategist David Happe.
“Costco’s success lies in its relentless focus on operational efficiency,” he said in a recent LinkedIn post.
“Its approach to inventory management is another key differentiator. While other retailers struggle with excess stock, Costco’s lean inventory model allows it to adapt quickly to market shifts without resorting to heavy discounting.”
Amazon once again solidified its prowess in online retail this year. The powerhouse has bolstered inventories and improved delivery speeds, providing its massive global customer base with convenience and low prices.
The company’s Prime Days in July and October were overwhelmingly successful. More Prime members participated this year than in 2023.
Investors were rewarded with a 48 percent gain in the share price.
Despite some initial consternation surrounding Jeff Bezos’s successor, Andy Jassy, he has outperformed expectations, says Nancy Tengler, the CEO and CIO at Laffer Tengler Investments.
“Andy Jassy got Tim Cooked when he took over Amazon from Jeff Bezos. He has led the company in his own way—brilliantly (as Cook did). The company is expected to grow earnings at 21 percent in 2025 and 22 percent in 2026,” Tengler said in a note emailed to The Epoch Times.
“We selected AMZN as our stock of the decade [in a WSJ interview] a few years back and believe it will continue to delight for years to come.”
Peeking at 2025
According to Fitch Ratings analysts, the U.S. retail sector will witness “slightly positive” sales and continued post-pandemic normalization in 2025.
Like 2024, the pursuit of value will be a critical theme for the industry in the year ahead.
“Consumers will return to longer-term trends, such as the quest for value and a focus on experiences like travel and dining out rather than goods,” they said in a report.
With lower savings levels, above-trend price inflation, and cost-conscious consumers, retailers might need to be penny-wise.
Andrew Moran
Author
Andrew Moran has been writing about business, economics, and finance for more than a decade. He is the author of "The War on Cash."
