Walmart Continues to Grow Their Customer Base Despite Continued Inflation
It might be more accurate to say, because of inflation Walmart has managed to increase their customer base. As supermarkets and similar one-stop-shop retailers like Target are experiencing a decline in sales, Walmart is showing growth so far in 2024; particularly online orders. According to Brick Meets Click, the Supercenter can attribute its growth to an increase in affluent shoppers; or households with approximately $200,000 in yearly income. What kind of observations can we make about the Brick Meets Click stats?
Affluent Shoppers Are Changing Their Spending Behaviors
One of the interesting statistics from the report is that affluent shoppers spend 1.5 times more than low income households. Walmart, whose typical customer resides in a low income household, has become increasingly attractive to a different more affluent demographic; one that spends more money on groceries and also shops more often. The result is that while other retailers are seeing sharp declines in sales, Walmart has experienced an increase.
Credit Karma’s analysis of shopping trends revealed that 80% of their users are feeling burdened by price increases in the last four years. In general, low income shoppers have steadily turned to food stamps, food banks, or had to decrease their grocery spending to pay other bills. The trend would have impacted Walmart negatively excerpt that decreased spending among this group was replaced by a shift in value spending among wealthier households.
Walmart’s numbers suggest that even while the gap between low income and affluent seems to be widening, wealthier shoppers are not immune to inflation, they are redefining value too. They are still shopping at specialty stores like Trader Joes and Whole Foods, but they are not spending as much here as they once were. Instead, they appear to be diversifying and turning to Walmart for lower priced necessities to offset costs of specialty items. They haven’t changed the habit of shopping frequently but they have changed where they make purchases.
What Does Walmart Offer That Affluent Shoppers Want?
Walmart’s increase in sales is primarily reflected in online purchases made by affluent households, suggesting that convenience is still valuable to shoppers. The store already claims 28.4% of the online grocery market and current projections suggest that in 2025 online grocery sales will total more than $63 million. Like other retailers, Walmart has invested in their online accessibility, and it is paying off. There is no extra work involved in tracking down a deal at Walmart. Their entire platform is built on consistently offering low prices. Adding extra convenience has worked to put them in a prime retail position.
Market research shows that 78% of shoppers are buying non-perishable items and 77% of shoppers are purchasing personal care items online. Buying from them is easy, but it's also predictable. Walmart’s structure allows them to offer, as their slogan says, everyday low prices instead of ‘keep an eye out for the next deal’ discounts. They run a tight ship and monitor inventories closely to minimize losses. They work with suppliers to negotiate low prices and because of their size they can typically negotiate better wholesale deals. And, they have their own off brand options. At a supermarket shoppers have to watch for deals or go in person to see what is marked down. In choosing Walmart customers know that they are getting a good deal all the time. It's a value received- through -minimal -effort business model that seems to be appealing to all demographics.
The chain has been criticized for the last decade and a half for not seeing the value of e-commerce even as Amazon exploded. The expansion into a more affluent market through the online shopping options seems to underscore the idea that a robust ecommerce avenue has the potential to develop markets that once felt impenetrable and in doing so, remold a business model. By attracting affluent shoppers the Walmart image is changing.
As inflation eases, will affluent shoppers remain loyal to Walmart or will they return to their previous spending habits? Is it just the wave of inflation that caused them to bob to the surface or is this a new normal? The fact that Walmart has edged out Target and is gaining competitive ground against Amazon suggests that their nearly 60 year commitment to everyday low prices finally coupled with an e-commerce strategy could make them more trustworthy with more demographics for a long time.
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