close
close

first Drop

Com TW NOw News 2024

    • Walmart’s latest success is thanks to affluent shoppers, the retailer says
    news

    Walmart’s latest success is thanks to affluent shoppers, the retailer says

    Vaseline Posted on

    play

    Walmart may have started out as a retailer targeting budget-sensitive consumers, but its customer base continues to grow, thanks to more affluent shoppers.

    The retailer saw market share gains among new shoppers across income levels, led mainly by upper-income households, which earn more than $100,000 in annual income, Walmart officials said during an earnings call Tuesday.

    Walmart had also highlighted the rise in the number of higher-income shoppers in an earlier earnings call.

    “Walmart has made gains among higher-income consumers thanks to its promise of being an everyday, low-price retailer where consumers can maximize their budgets and get value for their money, because all income groups, whether low-income, middle-income or high-income, incomes have faced the prospect of punishing inflation in recent years, especially in the food sector,” Neil Saunders, a retail analyst at research and analytics firm GlobalData, told USA TODAY.

    All consumers are looking for savings

    Although higher-income wage earners can absorb a larger share of price increases in their budgets than lower-income groups, “they still don’t feel like spending a small fortune on food and groceries. They still get a huge shock when they see those things.” ” he said.

    Saunders said he thinks once affluent shoppers have made an effort at Walmart to save money, “I think sometimes they’re pleasantly surprised because the Walmart of today isn’t quite the same Walmart of 10 or 20 years ago. It’s still a low price, but it has a more advanced offering. The stores look better.

    “So they went there for the low prices and enjoyed it, but they kind of stuck around because they said, ‘Actually, this isn’t that bad,’” Saunders said.

    Some of the stigma about shopping at Walmart is gone

    Saunders said a stigma that previously existed among some shoppers when it came to shopping at Walmart is gone.

    “The honest truth is that a lot of the things Walmart sells are sold elsewhere,” he said. “Why would you pay too much for the exact same product just because you’re curious about where you buy it? It just doesn’t make sense.”

    Shoppers can also make purchases and get Walmart’s low prices without ever entering a store with Walmart’s delivery and pickup options, which the retailer has invested heavily in, Saunders said.

    Affluent shoppers mainly buy their groceries at Walmart

    Saunders said he still expects Walmart to attract more higher-income consumers even if inflation is a little more subdued because people’s budgets are still under pressure.

    The new, more affluent customers are coming to Walmart mainly because of low food and grocery prices, Saunders said.

    “Walmart’s had a little more trouble getting some of those higher-income consumers to cross the aisle and buy non-food items like clothing and home goods,” he said.

    Walmart saw gains across all categories

    In the third quarter ended Oct. 31, Walmart’s U.S. comparable sales rose 5.3%, better than analysts’ expectations of a 3.61% increase, according to data compiled by LSEG and reported by Reuters.

    Sales grew across all categories, including the general goods segment, which has suffered from inflation over the past two years. The retailer also saw an increase in sales and home goods, Reuters reported.

    Walmart also saw comparable sales growth in its health and wellness category, helped by demand for weight-loss medications.

    The retailer’s focus on household and grocery products has shielded it from a slowdown in spending on non-essential products, helping the company post better-than-expected quarterly results in the first half of the year, Reuters reported.

    As purchasing power increases, Reuters reports that analysts expect upper- and middle-income consumers to be the main drivers of a shift toward spending on non-essential or nice-to-have merchandise.

    “I really think Walmart has captured a more affluent consumer,” Telsey Advisory Group analyst Joseph Feldman told Reuters. “I think the Walmart Plus membership has helped that and the company continues to reflect good strength in their online operations and their pick-up and delivery options.”

    Reuters contributed to this report.

    Betty Lin-Fisher is a consumer reporter for USA TODAY. Reach her at [email protected] or follow her on X, Facebook or Instagram @blinfisher. Sign up here for our free The Daily Money newsletter, which features consumer news on Fridays.

    Vaseline
    View all posts

    You Might Also Like