Costco
People wait to shop at a Costco store on Feb. 20, 2021, in Austin. GETTY IMAGES NORTH AMERICA / JOE RAEDLE

Brick-and-mortar retailers are coming back in 2022, and Target and Costco will be the big winners, according to Placer.ai, which tallies foot traffic to the nation's retailers.

Target ended 2021 on an uptrend, during the week of Dec. 20, 2021. Visits were up 9.1% compared to the same week in 2019. Likewise, Costco saw visits up 9.2% that same week. Those numbers are expected to increase as the COVID-19 pandemic comes under control.

In recent years, Target has upgraded its business model to turn its stores into "one-stop shopping" places where customers can pick up anything from groceries to medicine and general merchandise. The company has benefited by merging online and offline sales, whereby shoppers order online and pick up the merchandise in local stores.

"Target is an ideal example of what great retail looks like," said Ethan Chernofsky, vice president of marketing at Placer.ai. "It has a clear and nuanced understanding of its audience, and it invests heavily in expanding its multi-channel capabilities. The result is a unique ability to thrive in almost any scenario and to take advantage of whatever opportunity the retail world throws in its direction.

"Even better, it isn't resting on past successes and continues to push forward with concepts like Ulta and Apple store-in-stores and an ongoing push to improve its omnichannel approach."

Costco has upgraded its business model, too. Last year, it launched Costco Next (CN), a special category that includes a broad range of curated products from some of the company's most reliable suppliers. CN will allow Costco to ride the merging of online and offline sales, too, and compete effectively against Amazon.

"Costco has become the gold standard within the wholesale club space at a time when the inherent advantages of that model are put on a pedestal, and the wider segment is seeing tremendous success," said Chernofsky. "Even as visits to BJ's Wholesale Club and Sam's Club rise, Costco has maintained its leading position. This speaks to the retailer's consistent and ongoing ability to delight customers.

"But the gains here are even more significant as the membership model has a built-in stickiness that should turn short-term success into long-term strength, meaning this wave of success is unlikely to fade anytime soon."

The return of customer traffic has helped both companies deliver strong financial results.

Target reported a 12.7% jump in third-quarter comparable sales, on top of 20.7% growth last year. Store comparable sales rose 9.7%, on top of 9.9% growth last year. Comparable online sales rose 29%, while same-day services grew nearly 60% this year.

Costco reported a 12.7% increase in sales to $49.5 billion for the first quarter of 2022, up from $42.35 billion last year. Net income for the quarter was $1.324 billion, or $2.98 per diluted share, up from $1.166 billion, or $2.62 per diluted shares, a year earlier.

Wall Street has noticed.

Over the last 12 months, Target's shares have gained 88.12%, while Costco's shares have gained 63.85%, beating the S&P 500.

Editor’s Note: Panos Mourdoukoutas owns shares of Target and Costco.