Name: Why Walmart Is Going After Wealthy Shoppers
Uploaded: 2025-02-26T01:04:00.000Z
Duration: 5 min 31 s
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Shares ripping to another all-time high today.

So for Wal-Mart, the wealthy consumer is where they've been gaining the majority of shares.

In recent quarters, in particular, a lot of analysts have been asking, what's going on with Wal-Mart?

Why is it having so much success with these higher income households that are generally defined as having an income of $100,000 or more per year?

I'm Melissa Repco, and I'm a retail reporter for CNBC.

For the past few weeks, I've been hearing a lot about Wal-Mart's gains with upper income consumers.

Those shoppers contributed again to the company's results in the most recent quarter.

U.S. e-commerce sales grew 20 percent in the quarter, and home delivery, popular with those wealthier shoppers, is getting Wal-Mart's online business closer to profitability, too.

Wal-Mart's stock has been up, even hitting record and 52-week highs, because of the gains it's putting up with shoppers.

We're seeing higher engagement across income cohorts, with upper income households continuing to account for the majority of share gains.

Higher income shoppers are a huge opportunity.

It is known as the nation's largest grocer, but where it makes more money is selling things like throw pillows, clothing, makeup, items that are higher margin.

And those are often the tougher ones to sell.

If you sell to a higher income customer, they have more dollars in their pocket to spend, and they're more willing to spend more money all around.

So it tends to be a shopper that can endure the ups and downs in the economy.

That's been another growth business for the company, as has its third-party marketplace, where it's selling a broader assortment to these new and more frequenting customers.

And it really boils down to three factors, according to the reporting.

Walmart for a long time has focused on everyday low price, but it's been talking more about ways to make shopping easier for all of its customers.

Things like dropping off purchases at people's doors.

And one way it's done that is it launched Walmart Plus, its answer to Amazon's Prime program, and a way to get people to sign up and stick with its online shopping business.

As it's attracting more of these households, they're buying things like gluten-free items, organic items, the types of items that Walmart has added to its assortment.

It's also redone stores and redone its website to make it a little bit fresher looking, a little bit more modern and up-to-date.

So if you go into a remodeled Walmart, you'll see a lot of brands that you may not know Walmart sells.

Walmart's also launched fashion brands called Scoop and Free Assembly, and they have a lot of pieces that are lower cost but a little bit more fashion-forward.

Things that you might find at a specialty retailer, a cute sundress, a blazer, more color pops or earrings.

Again, a way to kind of get away from Walmart's reputation as being more of a grocer and more of a place to get things like paper towels.

What was, you know, interesting was the continued gains in the higher income household.

I remember you saying way back when that those gains might be difficult to hold on to as the economy improves, as shoppers return to their normal habits.

The fact that they're sticking now sort of suggests one of two things.

One, that they're not ready to move back yet.

Or two, that Walmart got a good shot at them and kept them happy.

The big question here is, can Walmart maintain these shoppers?

I recently spoke to John Furner, who's Walmart's U.S.

CEO, and he said that they're aware that in the past they've gained these shoppers and lost them.

For example, during the Great Recession, a lot of people traded down to Walmart because they could stretch their dollar.

This time, he argues it's a different thing, that people are not only coming to Walmart because of inflation, but they're also coming because of the investments that Walmart's made into its store and its website and having a broader product offering.

And so he thinks this time it has more staying power.

One of the challenges, too, is that Walmart is known for having kind of a no-frills attitude when it comes to its stores.

And so as it adds brighter lighting, mannequins, more fashion-forward pieces and really promotes those, could it risk alienating lower-income shoppers?

So it's been careful to add some of these higher-priced items to its website rather than in the store.

And in some parts of its store locations, you won't see as many of the fashion-forward brands.

Walmart's market share gains are coming from somewhere else, and that may mean that Target and Amazon in particular are at risk because those are two of the biggest competitors.

The other companies that are at risk are regional grocers or supermarket chains owned by Kroger or Albertsons.

I spoke to shoppers that have been going more to Walmart and where they're going less to is actually one of Kroger's supermarket chains because they realized they could save 20 percent in their weekly grocery bill.

Despite those gains, Walmart is taking a conservative approach.

We have to acknowledge that we are in an uncertain time and we don't want to get out over our skis here.

Again, we feel good about our ability to navigate the environment, whether it's tariffs or other macro uncertainty.