Inflation-weary consumers are pulling back on spending — but not at Walmart.
Sales for the retail giant’s U.S. division were up 4.2% during the second quarter of 2024. During a recent earnings call, John David Rainey, Walmart’s chief financial officer, said:
“Customers continue to be discerning and choiceful, looking for value to maximize their budgets … Across categories, we’re providing low prices and winning customer consideration, including in general merchandise…”
Here’s a closer look at why shoppers are flocking to Walmart like never before.
Even rich people now shop at Walmart
Before we get into the list of reasons people are shopping at Walmart more, we want to note an interesting development.
Walmart has long been a place for folks on tight budgets to find low prices. But increasingly, even wealthy people are shopping at Walmart. As Rainey noted during the conference call:
“We’re also seeing higher engagement across income cohorts, with upper income households continuing to account for the majority of gains, even while we grow sales and share among middle and lower income households.”
1. Cheaper groceries
Although inflation has taken hold throughout the economy in recent years, perhaps nowhere do shoppers feel the sting more than at the grocery store.
Those higher prices are pushing some shoppers out of traditional grocery stores and into Walmart. A CNN report notes that groceries now account for more than half of Walmart’s sales.
Food prices at Walmart tend to be about 25% lower than what you would find in a traditional supermarket, according to CNN.
2. Private brands
Walmart offers many private brands, also referred to as store brands. On the earnings call, Rainey said Walmart is “seeing private brand penetration continue to increase” in the U.S. market.
He specifically cited the promising performance of Bettergoods, a food brand launched in April, and No Boundaries, a young-adult clothing brand relaunched in June.
The Bettergoods brand included 300 products when it was introduced, making it Walmart’s largest private food brand launch in 20 years. Prices range from less than $2 to less than $15, but not all Bettergoods products are designed to be simply more affordable alternatives to equivalent products from national brands. Many “are totally unique to Walmart, introducing customers to new and exciting flavors and concepts,” the retailer said in April.
3. Price cuts
Prices are falling at Walmart. CEO Doug McMillon said on the conference call that prices were “slightly deflationary overall” during the second quarter of 2024 compared with the first quarter.
In June, Rainey said the number of rollbacks was up by 45% over where they were in at the same point in 2023.
4. Store pickup and delivery
Walmart’s U.S. online sales increased a whopping 22% in the second quarter, which the retailer attributes primarily to its store pickup and store delivery options.
With these options, you simply order online and select a time for either pickup or delivery. A Walmart associate at your local store then readies your order. If you choose store pickup, you will get an email when the items are ready. If you choose delivery, they will arrive at your doorstep from your local store, as opposed to being shipped to you from a farther-off warehouse.
Considering that Walmart has thousands of stores across every U.S. state and Puerto Rico, its ability to offer store pickup and store delivery give it an advantage over Amazon.
5. Upgraded stores
On the conference call, McMillon cited remodeling of stores as one of the factors “coming together to give us a shot at continuing to have growth with higher income levels, regardless of what happens in the economy.”
Walmart plans to remodel another 650 stores across 47 states and Puerto Rico during 2024 after investing $9 billion in remodeling more than 1,400 stores over the prior two years.
“Each store is designed to deliver a more modern shopping experience and improve the lives of our associates and customers from the moment they step into the new space,” Hunter Hart, senior vice president of Walmart Realty, wrote of remodeled stores in late 2023.
Changes include:
- A new checkout design based on customer feedback
- Expanded pharmacies, many of which also have been moved closer to the front of stores and feature private screening rooms for pharmacist consultations and services
- Updated vision centers featuring an expanded assortment of designer eyeglasses and sunglasses in addition to prescription eyewear.
- Displays that enable customers to interact with products
- Store layouts that are more open and spacious
- Expanded areas for store pickup and delivery services
- A dollar shop featuring seasonal items
- A Grab & Go section featuring ready-made foods and drinks
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