Walmart sees diverse shopper response to inflation

Walmart, the retailer, is seeing diverse reactions from US shoppers due to rising inflation, as some trade down on grocery items while others snap up big-ticket items like gaming consoles.

Why it matters

Consumers are not a monolith, and a spike in the cost of living will impact people in varied ways. Marketers should aim to understand how their particular target audience is behaving instead of relying on assumptions.

Walmart reports consumer “strength”

• John Furner, president/CEO of Walmart US, discussed how consumers are responding to inflation in a quarterly earnings call.
• “We do serve a wide range of customers and certainly have seen strength in the consumer,” he said.
• And Walmart is performing well across income groups: “We've seen strong growth with higher-income consumers, middle income, and lower-income [shoppers],” Furner added.

Consumer behaviours are inconsistent

• Walmart’s insights are sufficiently granular that it knows many shoppers are switching from, say, full gallons to half-gallons of milk.
• The company observed consumer switching when in categories like dairy, deli, bacon and lunch meat, with private-label goods often benefitting.
• “[In] categories like Deli, lunch meat, bacon, dairy, where we see customers trading from brands to private brands,” Furner said.
• At the same time, higher-priced items like games consoles are enjoying growth. Warmer weather is also boosting demand for items like grills and patio furniture.
• “We see both of those things happening at the same time. But, as we reported strong topline results, we see a wide range of consumer behaviour,” said Furner.

Price rollbacks are popular

• The company has introduced 10,000 rollbacks, with a focus on seasonal and general merchandise categories.
• As well as the inflationary environment, these price cuts reflect improved availability of inventory, the company noted.
• “The store is excited about the rollbacks and the customers are responding,” Furner said.

The big idea

“Where we see the switching from brands to private brands, we'll continue to watch that for a group of customers, but we've got to all work harder to keep prices low for the American consumer.” – John Furner, president/CEO, Walmart US.

Sourced from Motley Fool