Walmart Revenue: Wealthy Shoppers Increase Sales

Walmart It is known for its low price and no ruffle approach.

So it may be surprising to see wealthy shoppers helping retailers accelerate growth.

For over two years, the disc counter has noticed an increasing number of customers shopping with six figures on its website and stores. Doug McMillon, CEO of Walmart, said households that won more than $100,000 accounted for 75% of the company’s market share in the third quarter, in the company’s revenue call in November.

These new and frequent customers have helped support the company’s desire to sell higher margin items, such as clothing and household items. They are pushing for Walmart’s e-commerce sales, with double digits increasing for the 10th consecutive quarter. It can also boost retailers’ new revenue streams, such as the subscription-based membership program Walmart+ and the advertising business Walmart Connect.

As Walmart reports its latest revenue on Thursday, Wall Street will monitor whether those high-income customers are stuck after market share profits helped them rise by around 83% last year . However, some investors have questioned whether Walmart’s traction with wealthy shoppers has lasting power, especially when the inflation sticker shock cools.

In an interview with CNBC, Walmart US CEO John Furner admitted that retailers had previously acquired and lost upstream customers during the Great Recession, including in 2008 and 2009. The wealthy shoppers grew their dollars at big box retailers, but eventually returned to their competitors.

This time, Farner said the profits will continue as Walmart can save shoppers both time and money with e-commerce options.

“We deliver to you on the curb (in the store), so that’s not true,” he said in an interview in late January. “We deliver to your home. We deliver to your fridge. Its entire supercenter, a great retail format, is available in most parts of the country in an hour or two and is really fast. It’s growing into.

Brad Thomas, retail analyst and managing director at KeyBanc Capital Markets, said Walmart’s expansion of digital services helped persuade high-income shoppers to give shots. Some of these new or more frequent customers have joined Walmart+, a subscription-based membership program that includes perks such as free home delivery. Released about five years ago, Walmart+ is Walmart’s answer to Amazon Prime.

Walmart has not disclosed membership counts for the program, but has reported double-digit membership revenue increases for each of the last four quarters.

Thomas said e-commerce options wipe out potential hurdles for wealthy shoppers.

“There are customers in America who don’t consider themselves Walmart shoppers,” he said. “They can remain targeted shoppers, Publix, Whole Foods shoppers, and through their apps and delivery capabilities, but they can remain non-war core shoppers, but at Walmart prices, brands. You can get all the benefits of getting items.”

Some wealthy consumers have made tide detergent and prize paper towels from Walmart faster than Amazon as inflation forced all-income shoppers to hunt deals I realized that I can get a brand from the same country that I can.

Walmart’s website and apps also gained a large selection as they gained a large number of third-party markets. Starting this summer, the company has begun offering premium beauty brands through its website, including T3 hair dryers and Victoria’s Secret Perfume.

Shoppers can also find Chanel and Louis Vuitton handbags. Last month, Walmart announced an agreement with Rebag, a resale platform that sells items through Walmart’s marketplace.

But when Walmart tries to retain those customers, they want to encourage them to shop in person. Walmart has stepped up its investment in stores to counter the appearance and negative perceptions that high-income shoppers may have.

Walmart has expanded the pace of remodeling more than 4,600 stores across the United States, with plans to revamp approximately 650 locations a year. real estate.

Albis Washington, Walmart’s vice president of retail brand experience, says the remodeled store has brighter lighting, wider corridors and mannequins. The store also features newer, more fashionable brands from Walmart, such as Scoop and Free Assembly, as well as national brands that shoppers recognize, such as Reebok.

Disc Counter launched its new grocery brand Better Goods last year, with colorful packaging and creative flavours similar to products shoppers might find at Trader Joe. target.

Walmart US CEO Furner said some of these changes have attracted cap customers to the company’s stores and apps.

He said that Walmart’s market share profits with wealthy shoppers came from online and in-store shopping, but additional orders that added curb pick-up orders show early signs of popularity among those customers I said that. Even before the pandemic, Walmart saw people who shopped with curb pickups purchased higher-priced items such as prime beef and seafood, Farner added.

He said it was still true. Walmart is seeing more premium items in the shopping baskets of customers who buy online, receive home delivery or use curbside pickups.

Washington says Walmart has stepped in carefully redesigning its store, realizing it could endanger its reputation for low prices and resonance with core customers, which typically have low incomes. We promoted the new brand, but it has a mix of familiar staples, such as cheap bath towels and folded piles of denim.

“Excellent, increased experience and great value are not mutually exclusive,” said Washington at Walmart. “So when we see this, how do we do both, get new customers, and make sure we can retain the customers we have?

Comparing the modified stores with other fleets, Washington said higher comparable store sales reflect customers’ preference for different looks. Walmart declined to provide certain numbers, saying it would not disclose its sales numbers until it reported fourth-quarter revenue.

According to an analysis by market research firm Euromonitor, Walmart’s US e-commerce business’s customer mix has remained unchanged despite attracting high-income shoppers. About 34% of US Walmart online customers last year had revenues of over $100,000, which is roughly flat compared to two years ago.

Michelle Evans, global leader in retail and digital shopper insights at Euromonitor, said Walmart is showing market share from low- and middle-income customers.

Walmart still has a lower percentage of high-income shoppers than its several major rivals. 49% and 48% of Target and Amazon’s online US shoppers earn more than $100,000 each.

Amazon continues to be a formidable competitor, especially when it comes to wealthier shoppers and general product categories, Evans said. But Walmart’s biggest edge is the grocery sector.

One of Walmart’s newer, higher-income shoppers is Frances Cufflink. The 30-year-old lives in the Chicago suburbs of Park Ridge, Illinois, with her husband Sam, her 1-year-old son and their English setters. The Fring family’s total annual household income exceeds $200,000.

Last fall, Frances Cufflink signed up for Walmart+ after her mother-in-law ordered a stroller from the Walmart website and dropped it on the door three hours later.

Initially, she said she was hesitant to order fresh produce from Walmart. She bought packaged items such as pasta and flour. But over time, the couple began ordering groceries, dog treats and even most of their clothes for their son at Walmart.

Flinks stopped going to their old grocery store, Croger– Owned supermarket Mariano. They estimate that weekly grocery bills are about 20% cheaper.

Previously, the couple said they avoided Walmart because their nearest store is outdated. But Sam Frink said the game has changed with curb pickups and home delivery.

“There’s no need to go in,” he said. “That’s the biggest thing.”

Frances Cufflink said he will save the couple while juggling two careers, including home delivery from Walmart, which is included in the Walmart+ membership, with toddlers and dogs. Additionally, she discovered that Walmart has the grocery store she wanted and that she even had things she didn’t expect, such as organic blueberries, natural peanut butter, and specialty mushroom ravioli. I said that.

Still, Frances Cufflink said she still faces anxiety from friends and family about purchasing groceries from Walmart.

However, she said she was surprised when they tried Walmart’s groceries and liked it.

In her job, Euromonitor’s Evans tracked Walmart’s digital profits with high-income shoppers. But she also saw it firsthand in her home.

Her husband signed up for the family for Walmart+. During the holiday season, he told her that all Christmas purchases come from the discount.

“He commented that all the gifts come from Walmart. It clearly has an impression,” she said.

So she was surprised when she opened his gift and discovered it was a Michael Kors tote.