Walmart has profited from its pricing advantage, with prices about 25% lower than traditional supermarkets, according to analysts at Evercore IRI. Groceries make up more than half of Walmart’s revenues.
Walmart claims that its increases in the most recent quarter were “primarily driven by upper-income households,” despite the fact that low- and middle-class consumers have historically made up the majority of the retailer’s clientele.
Online, Walmart is also growing. Last quarter, its digital sales—which include in-store pickup and delivery—grew by 22%.
“Most Americans remain uncomfortable with food prices and are still actively looking for ways to keep their spending in check,” GlobalData Retail analyst Neil Saunders wrote in a client note on Thursday. “Walmart’s favor and has allowed the chain to continue to acquire new customers.”
The price of Walmart’s stock increased by 7% on Thursday afternoon.
As stretched consumers pull back, department stores, home improvement stores, and other retail sectors have suffered. Even fast food chains have had difficulties.
Overall, retail sales have decreased in recent months.
According to Home Depot, some lower-class Americans are choosing to cook at home rather than eat at McDonald’s, and the firm said this week that sales at its locations that have been open for at least a year declined 2.8% in the previous quarter.
McDonald’s CFO Ian Borden stated, “It’s a challenging consumer environment,” pointing out that many people are attempting to manage rising interest rates, inflation, and depleting savings.