Since its inception, Walmart has been a beacon for bargain shoppers. But now the retailer known for its low prices is appealing to a new demographic: customers who earn more than $100,000 a year.
Walmart, the world’s largest retailer, reported a strong third-quarter performance, and its CFO partly credits this new customer base for the boost. Sales were just under $170 billion, in-store sales increased 5.3%, and traffic jumped 3%, but the big difference was in e-commerce sales, which jumped 22%.
“We had a really strong quarter,” Walmart CFO John David Rennie said He said Yahoo FinanceAdding that the company saw gains across all product categories and income groups. About 75% of its share gains came from households earning more than $100,000 annually, a demographic typically associated with shopping at Amazon and Target, Rennie said.
A Walmart spokesperson said the company points to two aspects of the company that “help create that intrinsic traction” from higher-income customers. luck. The first is comfort. Walmart offers delivery and pickup options to customers “in a way that no other retailer does,” the spokesperson said. Another boon for Walmart is the increased number of items it has on sale, which “attracts customers who may not have shopped with us before,” the spokesman said.
This is a continuation of a trend highlighted by Walmart CEO Doug McMillon last quarter.
“We’re also seeing higher share across income groups, with upper-income households continuing to see the majority of gains, even while sales and share are increasing among middle- and lower-income households,” McMillon said on Walmart’s earnings call. August.
Walmart has perfected the trick
While Walmart has long been known for its rock-bottom prices, it has also become a haven for “dumb” shoppers. Dupes are basically just cheaper versions of expensive products that look almost identical. Some dupes don’t live up to the quality of aspirational or luxury brands, but others get the job done for less without sacrificing much comfort.
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“Wal-Mart’s transformation isn’t just about cheaper prices; it’s also about lower prices.” “It’s about redefining ‘value’ to include quality that more affluent customers can’t ignore,” Kaveh Vahdat, founder and president of Fractional CMO Services Rise UpHe said luck. They combined premium products with distinctive affordability, making it socially acceptable for high-income shoppers to say, “I got this at Walmart.”
More than it being “socially acceptable” to shop at Walmart, the spokesperson said the company has noticed that customers are proud to shop at the discount retailer.
“No matter your budget, we have something to offer,” a Walmart spokesperson said. “This can make people feel really proud of the food they put on their table, or the clothes, or the cosmetics they buy, from a beauty perspective.”
Some of the best things Walmart has done in the duds world is household goods. Social media influencers are sharing their best finds at discount retailers that look almost identical to aspirational brands like Pottery Barn and Crate & Barrel. Take the Edgewood chair, for example, which retails at Pottery Barn for a whopping $1,049. At Walmart, you can get a similar look for just $139, one TikTok user shared.
“To attract more affluent customers, Walmart has also introduced some premium product lines, such as its new premium home brand Bettergoods.” Greg Zakwicha leading e-commerce expert in marketing automation platform Comprehensive transmissionHe said luck. Bettergoods is where customers find many of the more expensive brand scams. “In recent years, they have also invested heavily in redesigning their stores, updating lighting, and focusing more on high-end products on their shelves.”
The Walmart spokesperson added that the company’s apparel division was also successful, highlighting Walmart’s collaboration with fashion designer Brandon Maxwell. One specific example of a popular Walmart scam is Scoop jackets and coats, which retail for around $60. They are duping Max Mara clothes, which sell for thousands of dollars.
“These items look really cool and are really well priced,” a Walmart spokesperson said.
Does Walmart beat Target?
Walmart and Target are both known for their big-box appeal, where you can buy anything from clothing to groceries to household goods. But the target usually appeals to a slightly more affluent demographic Prices are a little more expensive than Walmart.
But now that Walmart is seeing a growing demographic of shoppers earning more than $100,000 a year, it begs the question of how to differentiate itself from Target — and whether Target should worry.
“Although Walmart has made significant gains among affluent shoppers, it is not necessarily outperforming Target,” Zakwich said. “Wal-Mart’s core business still lies in low-income households, so unless they completely change their strategy — this shouldn’t change.”
In addition, experts said Walmart’s appeal of low prices is still enough to differentiate it from Target, especially in a period of inflation.
Vahdat said Walmart’s success with the wealthy is “the perfect storm for economic anxiety and strategic transformation.” “When the wealthy want ‘smart spending,’ Walmart’s expanded offerings position it as surprisingly practical and desirable.”
To be sure, Target is also doing well financially, as it saw second-quarter sales grow 2%, and is expected to report third-quarter results on Wednesday, thanks to growth in two sales categories.
“We have also seen improving trends across our discretionary categories, most notably in apparel, and are seeing continued strength in beauty,” Brian Cornell, Target Corp.’s chairman and CEO, said in a statement announcing the company’s second-quarter earnings.
Retail and e-commerce experts also said these are the categories where Target outperforms Walmart, including apparel and cosmetics.
“Target has invested heavily in creating stylish, high-quality apparel that appeals to fashion-conscious shoppers, while Walmart’s apparel division, although improving, is not yet a direct competitor,” said Mario Sarsino, founder of Walmart. Public relations foundersHe said luck.
Target did not immediately respond to a request for comment from luck.
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