How we measure Walmart and Retail performance from Space.
Welcome to the Satellite Nowcasting Newsletters (SNN) where we deliver insights derived from SpaceKnow's nowcasting satellite activity datasets straight to your inbox.
Let's jump into what we're seeing at Walmart.
Last week, Walmart provided an update on the second quarter and full year 2023. The company’s profit expectations declined due to a change in consumer spending habits caused by increased consumer prices.
Since inflation has soared, and real purchasing power has fallen, Walmart consumers have been cautious about spending money. Groceries are necessary products but consumers are postponing the purchase of electronics, clothing, etc which have higher profit margins for the company.
SpaceKnow indices play a leading role in exploring supply chain movements of the company. Satellite activity data give insights intothe performance of company operations in near-real time.
Walmart Accumulated Level Index (ALI) is designed to capture the trend in activity at logistic (distribution) centers owned by Walmart. Walmart’s distribution centers play an important role in the retail process. There are over 200 distribution centers across the country and 31 eCommerce fulfillment centers. This network ships everything from general merchandise to groceries to Walmart and Sam’s Club stores and to e-commerce customers. Every regional distribution center supports 90 to 100 Walmart stores in a 150-mile radius. Our index tracks the movement of trucks in and out of these centers. Thus, we capture Walmart’s buying trends, the movement of goods to their stores, and any inventory patterns on an aggregate basis.
Walmart ALI started to lose momentum in the beginning of February after Russia invaded Ukraine and food and fuel prices rose suddenly and sharply. The decline from the beginning of February to the end of June is 21.8%. The trend has stabilized from the second half of July.
Figure 1: SpaceKnow Walmart Accumulated Level Index 1 day rolling
Walmart ALI is correlated with the cost of goods sold. Our index measures the volume of goods sold, while COGS is in dollars. Part of the difference in the two lines is probably due to falling implied prices of the average good sold, as households shift to groceries versus discretionary items.
Figure 2: Walmart Accumulated Level Index vs. Walmart's COGS
Walmart Satellite Activity Indexes(SAI) are designed to capture the change in activity at logistic centers. The Walmart Low Activity Index (ASI) shows the percentage of Walmart stores exhibiting low change in activity in the observed time period. If the index is 8%, the interpretation is that 8% of Walmart stores showed low change in activity during the selected time point. The SAI index decreased by 50% since the end of February and stabilized in the third week of June. However, the index is still bumping along the bottom and has a long way to recover.
Figure 3: Walmart Activity Index 30 Day Rolling
Figure 4: Walmart Low Activity Index 30 Day Rolling
The market will also be watching back-to-school sales as an indicator of customer behavior. Our indices will be a near-real-time barometer of that trend.
P.S: The news team at Barron's used similar data to write this article where they claimed that last April's retail numbers would have been misleading were it not for SpaceKnow's nowcasting data.
