Amazon, Walmart, Five Below, and Ross Dress for Less have continued to outperform in traffic and spend. Most brands have shown a stronger trend than last week, especially Kohl’s and Ross. Store spend has been less vibrant than traffic due to more shopping around for deals, i.e. some average ticket pressure, and online wallet taking share. Last week, we wrote that we expected the pace of holiday foot traffic to accelerate going into Christmas day, and as shown below, that has happened; however, Advan’s transaction data shows that store spending has not, save department stores and off-price.

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The positive trend in foot traffic has held since Black Friday Weekend. Amazon, Walmart, Five Below, and Ross Stores have continued to outperform in traffic and spend. Best Buy, Target, and traditional department stores are trailing their FQ3 performance. The October monthly retail sales from Census report (today) reinforces that trends that have been underway all year continue, i.e. no new trends or inflections shown in the report. The season-to-date pace of foot traffic and sales have been solid for Five Below, sporting goods, Walmart, Apple, but more neutral for Target and the department stores – including Dillard’s and Bloomingdale’s, both of which had strong FQ3 results.

The grocery industry is becoming more dynamic with lots of announcements of new partnerships with DoorDash, Uber Eats, and Instacart. Kroger is the latest as it pivots from large robotic warehouses to 3P delivery and more stores. Kroger, Walmart, Costco, and Aldi are also accelerating their new store programs. Joining the scrum, Amazon is rapidly expanding served markets with same-day grocery delivery. The consumer hunt for value, combined with the increased access to the value of Walmart, Costco, Aldi, etc.

The 7th issue of The Advan Buysider is now available. As a reminder, The Buysider is designed to provide timely, novel, and impactful insights on specific names and topics using Advan’s data. I welcome your feedback. Should you not see names / sectors that are of high interest today, reach out to me. The takeaways from #7: 1) You’ll notice less timeliness in this issue; I focused more on expanding the names covered in each sector than updating current names / themes.

Dollar store results for the 2H are coming in strong despite pressure on the lower-end consumer. The outperformance is the result of strong execution on Retail 101 fundamentals by new management teams. Tariff cost pass-throughs, better in-stocks, and better assortments are driving the comp-ticket. Improved store standards, consumer trade down, and increased social media marketing are driving comp-traffic. Despite the widely reported pull-back in spending by the less-affluent during the September – November period, for FQ3, the dollar stores reported comps in line with expectations, resulting in consistent 2-year trends, save Five Below, which again, reported blow out results; that stems from selling purely discretionary merchandise driven by a rocket-fueled toy / merchandise trend of Lilo & Stitch, K-Pop Demons, and SpongeBob.

· Black Friday Weekend traffic was softer YoY due to adverse weather, a softer weekend box office, aggressive online promotions, and potentially a strong Saturday college football schedule that kept folks on their couches for the day. (They sprang into shopping malls on Sunday). · The trends align with what we said about September (and likely October) retail sales. This suggests that the Christmas season is likely to be good, but not gangbusters like 2024’s.

September core retail sales growth, per the Census Bureau’s monthly report , accelerated from the prior three-month trend, with strength coming from more affluent consumers, weight loss drugs, K-Pop Demon Hunter merchandise (and like categories), and the absence of Temu (a previously disruptive agent). September also faced a number of large 1-off headwinds; their lapsing sets up October for stronger growth on a MoM basis. However, October ’24 was a very strong month, making it a difficult compare, plus there was the shutdown jitters and SNAP break, and so we doubt that it will outgrow September’s +5%; +3% would still be solid.

The club channel continues to thrive in today’s thrifty K-shaped economy, with the channel and its strong private brands taking meaningful share-of-stomach. The club channel is widening its price gaps to conventional grocers by not increasing retail prices despite commodity cost inflation, implying that the share capture is likely to accelerate. That share capture will lead to further volume and margin pressure on national CPG brands. In yesterday’s note on Walmart’s results and its strategic actions, we highlighted how it was leaning into providing greater value to its shoppers by not passing through cost inflation onto its shoppers and increasing price rollbacks.

When prices are inflating and the consumer is evermore thrifty, it’s a great time to be an off-price retailer. That, plus easy comparisons allowed the sector to drive a +400bps sequential acceleration in comp-sales; however, as shown in the table, the 2-year CAGR was little changed. That said, the sequential improvement in the observed traffic trend suggests that the underlying pace of the business has improved due to the “evermore thrifty” component as well as the brands success in sourcing more better & best product brands, especially for **Ross Dress for Less **and Burlington stores, whereas TJX is already playing that card well.