Walmart sees trade-down boost as brand loyalty dips

Deal chasing is now “a way of life” for American consumers, with price-conscious shoppers heading for Walmart, according to a new study.

PYMNTS’ Consumer Inflation Sentiment Report, the ninth instalment in the series based on responses from 2,136 shoppers, reports that around half have changed where they shop for pricing reasons, a total of 56% of retail shoppers and 47% of grocery shoppers.

How it affects Walmart

According to the company’s full-year 2022 results, at least half of market share gains in grocery are a result of higher-income buyers trading down in their food shopping, CFO John David Rainey told investors.

While this leaves Walmart in a stronger position than some other retailers, with potentially hefty volume sales, it too is struggling to maintain margins as more profitable discretionary spending has softened, and as less profitable food sales have grown.

In light of this shift, the retailer explains the strategic move of expanding into the retail media space, with Walmart Connect an increasingly important part of the business.

By the numbers

• 44% of grocery and retail shoppers say they would buy a different brand if it’s cheaper than their typical favorite.

• 61% of consumers say they are highly concerned about the near-future of the economy.
• 68% of retail consumers anticipate further price rises in the next year.
• 45% of Walmart shoppers said price was their top reason for shopping there. Costco (50%) and Kroger (25%) also attract highly price-conscious shoppers.
• 56% of low-income consumers surveyed said Walmart was their favorite retailer.

Sourced from PYMNTS, WARC