How Walmart Attracts Inflation-Sensitive Shoppers

PART 1 OF A 5-PART SERIES

By leveraging cutting-edge technology, omnichannel capabilities, data-driven insights and strong customer relationships, Walmart is not just keeping the pace, but leading the pace in food retail today, with 25% market share in grocery.

The retailer's customer-centric approach has allowed the company to keep winning shoppers at a time of economic uncertainty, and at a time when competition – especially in grocery – is at an all-time high. 

Recently at the Walmart shareholders meeting in Bentonville, Arkansas, the retailer's newly named U.S. Chief Merchandising Officer Latriece Watkins, and Tom Ward, EVP and chief e-commerce officer for Walmart U.S., shed light on the retailer's transformation and how it is navigating the evolving economic landscape and redefining what an omnichannel retailer truly is.

Watkins, who has worked in a variety of roles at the company over two decades with Walmart, said the retailer's ambition is to be the customer's first choice, and there are actions the company has to take in support of that.

"First, we have to listen to customers and know what's important to them. Second, we have to understand the environment that they're a part of. And then third, we have to find ways to provide value to them," Watkins said. "We understand that the customer is focused on inflation and that that's caused them to have to make choices on what and where they'll spend. We work with our suppliers to make sure that we're offering an assortment that has value."

By "value," Watkins said, that means "you have to have value on national brands, you have to be on trend," she said. It also means offering some of the brands that are normally direct to consumer.

"We're doing a better job than ever at getting those brands to come to Walmart and in a lot of cases come to Walmart first and exclusively, which we think is important," Watkins explained. "In addition to that, finding these elevated brands and bringing them to life in the store, what you'll see is a different kind of experience. It's an omni experience, and you'll see us bringing all of that to life in our assortment across all of our 'store of the future' stores."

Watkins offered an example around how the retailer is changing up its strategy when it comes to seasonality.

"Most recently around Easter, we were very focused on that holiday meal because we knew that the customer was stretched," Watkins said. "We knew that the holidays were important to them, but we also knew we had to find a way to give them value. So both holidays and Easter, we were able to provide a basket that was the same cost as last year. So those are ways, I think, reasons why I think the customer continues to choose us because we're listening, we understand their issues and we understand that it's our role to provide value for them."

Watkins also discussed the retailer's marketplace and how the company is leveraging it as another avenue for building great assortments.

"We've had the opportunity to start an item on marketplace as the seller builds their inventory and their capacity, move it to 1P, and in some cases even move that item from 1P to stores," Watkins said. "That gives us the opportunity to give the seller a chance to build their business, to find the right customer base, to then be able to launch it on our website and then show it in our 1P assortment as well, brought to life in stores. That's the beauty of the Walmart omni experience that can be limited in other environments."

Ward added that not only is the retailer focused on creating more value for the shopper, it is also aiming to win more occasions.

"If you think about the evolving needs of the customer, they're constantly changing and they don't want to choose between channels," Ward said. "Whether they are going in stores, going to pick up, going to delivery, going to do express delivery, or drones, or whatever else, the magic is that they are doing all those things. We are winning the occasion more often because we've been investing in those needs, and we're going to keep building on that momentum and we're also going to keep improving our experience."

Ward detailed how the company recently rolled out a new redesign of the website and app a couple of months ago, "a much more engaging experience. ... In this new design, we're doing exactly what we do really well in our physical store, which is if you walk into a store in Walmart anywhere in the U.S. and you didn't know what the date was, you'd probably know what the season is just by the way we've merchandised it."

Ward said the retailer intends to make its Express Delivery service even faster.

"It's going to give you more of an accurate approximation versus just less than two hours and we will continue to build upon that," Ward said. "For example, on Mother's Day people tend to be last-minute shoppers. So if you'd forgotten it was Mother's Day and woke up on Sunday to realize that you hadn't bought a card or any flowers, you could buy all those things on the same day and you could get them in 45 minutes if you used Express Delivery. We saved the day, I assume, for a lot of people. So the convenience piece is really important."

In May, Walmart posted strong results for the first quarter of its 2024 fiscal year, with grocery largely driving its better-than-expected performance. The company – No. 1 on The PG 100, Progressive Grocer’s recently released list of the top food and consumables retailers in North America – also raised its guidance for the rest of the fiscal year.

Global online sales were robust, rising 26% in this past quarter, compared with 17% in the fourth quarter of 2022, which included the all-important holiday season. Walmart’s solid digital performance was fueled by gains in pickup and delivery, as well as advertising – Walmart Connect ads grew nearly 40%.

Walmart reported strength in grocery and health-and-wellness categories, with softening sales in general merchandise. Private-label sales were up, and the shopper base included more higher-income households.

Each week, approximately 230 million customers and members visit Walmart’s more than 10,500 stores and numerous e-commerce websites under 46 banners in 24 countries. The Bentonville, Ark.-based company employs approximately 2.3 million associates worldwide. Walmart division Sam’s Club is No. 8 on The PG 100 list.