The Q1 2023 earnings season is in full swing , leaving in its wake a mixed bag of results from America's retail behemoths. The titans of the industry, Amazon AMZN and Walmart WMT , raced ahead, while Target TGT , Home Depot, and Lowe's hit some stumbling blocks. All this against a backdrop of a retail industry trying to find its footing amidst shifting consumer behavior and a return to pre-pandemic trends.

According to the US Department of Commerce, retail sales grew by 3.6%, and e-commerce sales rose by 8% in Q1 2023 compared to the same quarter in 2022. A return to the norms of a decade pre-pandemic, when retail would grow at 4%, and e-commerce at 14.9% annually. This comes after an unusual year, from March 2021 through December 2022, when brick-and-mortar retail unexpectedly kept pace with, or even surpassed, e-commerce sales due to unique pandemic-driven consumer behaviors.

Amazon, the e-commerce giant, showed no signs of slowing down. Despite battling increasing competition, Amazon's Q1 US retail revenue grew by an impressive 11% compared to Q1 2022. Citi Research estimates that Amazon's Gross Merchandise Value likely grew 12% from the prior year, outperforming the industry average of 8% for e-commerce.

Walmart followed suit, standing tall with its Q1 earnings. The company's US same-store sales were up 7.4% vs last year, more than twice the industry average. Even more impressive, its e-commerce sales were up by a staggering 27%, more than three times the industry average.

However, while Amazon and Walmart were celebrating their victories, others found the going tough. Target's Q1 earnings showed a disappointing growth of 0.7% in comparable store sales and a decline of 3.4% in comparable digital sales. The company's bleak outlook for 2023, expecting a low-single-digit decline to a low-single-digit increase, reflects the struggles of the US consumer.

Home Depot's Q1 earnings were equally disheartening. The company reported its biggest revenue miss in two decades with a decline of 4.6% in same-store sales and a decline of 2.9% for digital sales compared to Q1 2022. Home Depot now expects sales and comparable sales to decline between 2% and 5% for the fiscal year.

Finally, Lowe's, despite beating revenue expectations, followed a similar trajectory with a decline of 4.3% in comparable store sales. Although digital sales grew by 6% compared to a year ago, Lowe's also lowered its projections, expecting sales to decline by 2% to 4% this fiscal year.

All retailers are grappling with a noticeable shift in consumer spending patterns. As discretionary spending shrinks, consumers are prioritizing needs over wants. They're opting for fewer and smaller purchases and showing a renewed focus on value. It's not all doom and gloom, though. This consumer behavior presents an opportunity for retailers to reassess, innovate, and adapt to meet the changing demands of consumers. The coming quarters will indeed be a test of resilience, creativity, and agility for these retail giants. The battle for the US consumer's wallet continues.