Wal-Mart’s revenue: Wealthy shoppers boost sales | Real Time Headlines

Walmart Known for low prices, there is no unnecessary method.

So it may be surprising that wealthy shoppers are helping drive retailer growth.

For more than two years, the magazine has been paying attention to more customers on its website and stores. Walmart CEO Doug McMillon said on a November revenue call that households with revenues of more than $100,000 accounted for 75% of the company’s market share growth.

Those newer, more frequent customers helped support the company’s desire to sell more and more profitable items, such as clothing and household items. They are driving Walmart’s e-commerce sales Growing through double numbers 10 consecutive quarters. They can boost retailers’ new revenue streams, such as Walmart+, a subscription-based membership program, and its advertising business, Walmart Connect.

As Walmart reported its latest earnings on Thursday, Wall Street will focus on whether those high-income customers stick to it, which helped the retailer’s stock surge about 83% last year after market share growth. However, some investors question whether Walmart’s traction on wealthy shoppers is enduring, especially if inflationary stickers are shocked.

In an interview with CNBC, Walmart U.S. CEO John Furner admitted that retailers had already gained high-income customers in 2008 and 2009 during the Great Depression. Wealthy shoppers extended the dollar at large retailers, but then eventually returned to rivals.

This time, Furner said the proceeds will continue as Walmart can save shoppers and money with e-commerce options.

“It’s different because we deliver it to you (the curbside of the store)” he said in an interview in late January. “We ship to your house. We deliver your refrigerator. The entire super center (this one) It is an amazing retail format) available for one or two hours nationwide in one or two hours and grows very rapidly.”

Brad Thomas, retail analyst and managing director of Keybanc Capital Markets, said Walmart’s expanding digital services help convince higher-income shoppers to take a shot. Some of these newer or more frequent customers join Walmart+, a subscription-based membership program that includes privileges like free home delivery. Walmart+, which one emission Walmart’s answer to Amazon Prime about five years ago.

Walmart has not disclosed the number of members for the program, but has reported double-digit membership revenue growth in each of the past four quarters.

Thomas said the e-commerce option removes potential barriers to wealthy shoppers: the potential stigma of shopping in the big stores themselves.

“There is a customer in the United States who doesn’t think they are like Walmart shoppers,” he said. “They see themselves as target shoppers, public or Whole Foods shoppers and can keep non-Walmar core shopping through the app and through delivery capabilities. but got all the benefits of getting branded products at Walmart prices.”

As inflation forces all income shoppers to fight for deals, he said, some wealthier consumers realize that because of stores near Walmart, they can get tidal detergents or bounty tissues cheaply from Walmart, usually Faster than Amazon.

Walmart’s website and apps have also added options as the company has significantly increased its third-party market. Starting this summer, the company began offering quality beauty brands through its website, including hair dryers from T3 and perfumes from Victoria’s Secret.

Shoppers can now also find handbags from Chanel and Louis Vuitton. Last month, Walmart announced an agreement with Racale Platform Rebag, which sells merchandise through Walmart’s market.

However, when Walmart tries to keep these customers, it also wants to encourage them to shop in person. Walmart has stepped up investment in stores to give it a new look and opposes negative perceptions high-income shoppers may have.

Hunter Hart, senior vice president of Hunter Hart, said Walmart has accelerated the renovation of more than 4,600 stores in the United States, with plans to renovate about 650 locations each year, an acceleration of 450 to 500 per year. real estate.

Renovate the store Brighter aisles and models are brighter, said Alvis Washington, vice president of retail brand experience at Walmart. These stores also feature updated, more stylish brands from Walmart Spoon and free assemblyand national brands that shoppers will recognize, such as Reebok.

plate Launched a new grocery brandBettergoods, last year, has a colorful packaging and creative flavor that looks similar to shoppers in Trader Joe or Target.

Walmart U.S. CEO Furner said some of the changes attracted top-income customers in the company’s stores and apps.

He said Walmart’s market share with wealthy shoppers comes from online and in-store shopping, but increased curbside pickup orders, showing early signs of popularity with these customers. Even before the pandemic, Walmart saw people shopping with roadside pickups buying higher-priced items such as Prime beef and seafood, Furner added.

He said That’s still true: Wal-Mart sees more premium items in the basket, which customers buy online, deliver to home or use curbside pickups.

Washington said Walmart stomped in the redesign of its store, realizing that it could be known for its low prices and resonance with its core customers, which typically have lower revenues. It promotes new brands but incorporates familiar staples such as folded cheap bath towels and denim.

“Having a wealth of experience and a huge value is not mutually exclusive,” Walmart’s Washington said. “So when we look at it, it’s like, how do we do it and make sure we can acquire new customers and maintain the customers we have?

When comparing the remodeled stores with other fleets, higher store sales reflect customers’ preference for different looks, Washington said. Walmart declined to provide specific numbers, saying that sales numbers will not be released until the fourth quarter earnings report.

Analytics from market research firm Euromonitor show that Walmart’s U.S. e-commerce business hasn’t changed, even if it attracts higher shoppers. Last year, about 34% of Walmart’s online customers in the U.S. made $100,000 and above, which is roughly flat compared to two years ago.

Michelle Evans, a global leader in retail and digital shopper insights at Euromonitor, said this suggests that Walmart is also gaining market share from low- and middle-income customers.

Walmart still has a higher share of revenue shoppers than some key competitors: 49% and 48% of online U.S. Shoppers at Target and Amazon earn more than $100,000, respectively.

Amazon remains a strong competitor, especially in wealthy shoppers and general merchandise categories, Evans said. But Walmart’s biggest advantage is its grocery division.

Frinks stop going to their old grocery store, Kroger– owned supermarket Mariano’s. They estimate their weekly grocery bills are about 20% cheaper.

Previously, the couple said they avoided Walmart because their nearest store was outdated. Sam Frink It says that with the delivery of roadside pickups and homes, the game has changed.

“You don’t have to go in,” he said. “That’s the biggest thing.”

Francesca Frink said Walmart’s home delivery, including Walmart+ membership, saves couples, a little kid and a dog while they both juggle two professions. Plus, she said, she found that Walmart has the grocery store she wanted, and even the grocery stores she didn’t expect, including organic blueberries, natural peanut butter and specialty mushroom ravioli.

Still, Francesca Frink said she still faces some concerns from friends and family about buying groceries from Walmart.

But she said they were surprised when they tried and liked Walmart’s food.

In daily work, Euromonitor’s Evans tracks Walmart’s digital earnings, which earn high-income shoppers. However, she also witnessed it in her family.

Her husband signed to Walmart+ family. During the holidays, he told her that all Christmas purchases would come from plates.

“He commented that all the gifts came from Walmart, which obviously made a certain impression,” she said.

So she was surprised when she opened his gift and found out it was Michael Kors tote bag.