It’s been a rough economic year for many consumers, which has translated into a notably profitable economic year for the discount giant Walmart. The mega-retailer reported an 8.2 percent gain over last year’s sales for the third quarter, with shoppers both spending more overall and buying more stuff.
It may not be a surprise that a company known for great prices and deep discounts would do well in a time of record inflation. What’s notable is who is buying from Walmart now. About 75 percent of the retailer’s increase in sales is from shoppers making $100,000 or more per year.
With food inflation up 12.4 percent over a year ago, these well-off shoppers largely spend their dollars on groceries. Walmart’s grocery sales saw “mid-teens growth,” Walmart said in an earnings call, continuing a trend that began earlier in the year. “During a period of time when people are more sensitive to price, it makes sense that they would increase the amount of their wallet that would be coming to Walmart because of value,” said Walmart CEO Doug McMillon. “Regardless of income levels, families are more price-conscious now.”
Shoppers are “trading down” to save money, according to Walmart—increasing their spending on the store’s private-label items, which cost less than brand name alternatives. Consumers also bought less expensive proteins, like beans, peanut butter, and hot dogs, over more expensive options, along with cheaper versions of baking goods, baby food, and dog food.
The trick now is holding onto these new customers, something Walmart thinks it can do. “If we can stand tall during this period of time, we think they’ll keep coming back to us because we do have quality, we do have value, and we’ve created a lot more ways for them to save time in the store and with pickup and delivery,” McMillon said. “So, that’s what we’re out to do.”
- Why are high-income shoppers buying groceries at Walmart?
- What can Walmart do to hold onto these shoppers once financial strains lessen?
- How could Walmart translate increased grocery sales among high-income shoppers to more interest in other items, like apparel and electronics?
Sources: George Anderson, “Can Walmart Hold onto the New, Wealthier Customers It Is Picking Up?” RetailWire, November 16, 2022; Ines Ferré, “Walmart: $100K+ Income Households ‘Shopping with Us More Often’,” Yahoo, November 15, 2022; “Walmart Inc. (WMT) Q3 2023 Earnings Call Transcript,” fool.com, November 15, 2022; Avery Hartmans, “People Who Make More than $100,000 a Year Are Grocery Shopping at Walmart, and It’s Giving the Chain a Major Edge over Its Rivals,” Insider, November 20, 2022; Lauren Debter, “Walmart Attracting Wealthier Customers Looking for Cheaper Groceries as Inflation Rages,” Forbes, November 15, 2022