Walmart says lower-income shoppers appear to be increasingly “navigating financial stress.”
This comes as the so-called “K” shaped economy becomes more prominent, which happens when higher incomes see their purchasing power sharply rise as lower incomes lose purchasing power at the same rate — just like the letter “K.”
Walmart saw its comparable sales, excluding fuel, rise 4.1 per cent last quarter and e-commerce sales surge 26 per cent.
Walmart’s executive team spoke in a conference call with shareholders and analysts on Thursday after reporting quarterly earnings.
“We see with our customers that the high-income customer is spending with confidence into many categories, while the lower-income consumer is more budget conscious and perhaps navigating financial distress,” said executive vice-president and chief financial officer John David Rainey.
Consumers focusing on essentials like food amid the heightened cost of living has been a pattern for several years as spiking inflation drives prices higher, and leaves less wiggle room in household budgets for non-essentials.
Walmart says groceries in particular have been driving its growth, and that includes its Sam’s Club brand of stores, which it says typically appeals more to middle and higher-income households because of the extra membership fees.
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Walmart says its Sam’s Club membership revenue grew more than 17 per cent globally, and 5.6 per cent in the U.S. alone.
Walmart’s CEO, John Furner, said the company is prioritizing offering value across Walmart grocery, as well as its Sam’s Club stores, to meet the demand of these cost-conscious consumers.
“This is an industry, particularly in food, where everyone is looking for value and has been for a really long time,” he said.
“What the team has done, in particular at both Sam’s Club and Walmart U.S. in the last quarter, is they focused on where are the places that we want to provide the very best value we can.”
Canadian Tire pointed to similar consumer habits in its recent earnings reports this year, including that sales growth from members of its loyalty program is outpacing sales from non-loyalty members.
“We see a Canadian customer that is resilient but discerning. In the face of macroeconomic confusion, they have their chin up and their eyes wide open,” said Greg Hicks, president, CEO and director at Canadian Tire, in a conference call with shareholders and analysts on May 14.
“Even as budgets get strained, customers are still shopping, but they are more selective and more value-driven.”
“I would just reiterate that in affluent households, our registered members, agnostic to debt burden, are also spending and engaging with us more … we’re providing value at both ends of the spectrum for sure.”
Higher gas prices have also added to ongoing affordability challenges amid the heightened cost of living, as the closure of the Strait of Hormuz amid the Iran war continues to choke off the world’s oil supply. This means consumers have been feeling the pinch even more since the conflict began.
Rainey answered a question from an analyst about changes in consumer habits as fuel prices rise.
Of course Canadians in the lower wage brackets and those on fixed incomes are stressed and struggling. Due to the inflationary spiral that deficit spending and having to service national debt to the tune of more than a BILLION dollars EVERY WEEK thanks to the Trudeau and now Carney Liberals over the last 11 years. But Carney trues to gaslight us by saying we haven’t had it so good. What a weasel.
Retailers mentioned in this article pay the majority of their retail employees minimum wage while only offering part time hours. I work for minimum wage, 6 days a week, at a discount grocery store, accumulating less than 40 hours a week and I can’t afford to buy food! Pound sand you corporate stooges!
Compared to just 10 years ago the cost of living is expensive what is going on in this 2020s decade never thought that basic necessities of life like food and housing would go up