Sanctions against Russia for its war on Ukraine are hitting Americans’ pockets, especially at the gas pumps.
Due to gasoline prices not seen since the late 2000s, buyers across the country are reducing their car consumption. Shopping routes limited to one-stop retailers have led to reduced foot traffic and some physical businesses have suffered.
Nationally, for the week of March 7, retail visits were down 4.3% from the same week three years ago, according to the data firm. Place.ai. This is the most severe decline in weekly foot traffic in the past 12 months and cannot be attributed to the ongoing health crisis, Placer.ai claims.
“Gas price increases present a unique challenge in that they fundamentally change the calculation of consumer demand, and if the change continues, we could see a continued impact on [retail] visits”, Ethan ChernofskyPlacer.ai’s vice president of marketing, said in a statement to Commercial Observer.
But mission-driven shopping trips aren’t bad for all retailers, he said, because consumers tend to save money by consolidating their groceries.
“This could provide an additional short-term boost to grocery and supermarket executives who may see a return to mission-driven shopping and the attendant increases in basket size,” Chernofsky said.
The week of March 13 saw the biggest rise in gasoline prices since the start of the war in Ukraine, according to a retail petroleum data company GasBuddy, which shows the national average hitting $4.34 before dropping slightly. California is currently experiencing the highest gasoline prices in the country, with prices averaging $5.22 per gallon.
Areas such as South Florida, the Chicago area, and the Tri-State area including Pennsylvania fell into the same price range after California, but did not experience spikes above 4, $50, according to GasBuddy. National average fuel prices are on the rise 71.5 cents from February and $1.37 a gallon higher than a year ago, according to GasBuddy.
This seems to lead to a drop in foot traffic. During the week of March 13, there was a 4% drop in foot traffic to retailers compared to the same period last year, according to Placer.ai. Visits to dollar stores saw a sharp decline, falling 1.7% alongside grocery stores, after increases of nearly 20% in February from a year earlier.
The big winner is Costco, according to Placer.ai, which not only offers a wide range of products in one place, but also operates approximately 640 gas stations in North America; and their gas is cheap too.
The week of March 7 shows that Costco’s retail petroleum operations saw a 159% increase in visits over the previous year.
It may only be a matter of time before sales patterns stabilize.
“We also found that consumer demand has been incredibly resilient and, after short-term shifts, has consistently returned to ‘normal’ levels, even in the face of significant headwinds,” Chernofsky said.
Marc Hallum can be contacted at [email protected].