More middle- and high-income shoppers choose to shop at Walmart

On August 16, Walmart released its second quarter performance report for fiscal year 2023 ending July 31. The report showed that Walmart's revenue in the second quarter was US$152.86 billion, an increase of 8.4% year-on-year; net profit was US$5.147 billion, an increase of 17.9% year-on-year .

Although inflation has squeezed Wal-Mart's profit margins, sales are still growing. Part of Wal-Mart's sales revenue comes from inflation, which has pushed up the prices of food and other goods. Previously, Wal-Mart issued a profit warning, saying that consumers cut back on other spending due to rising food and energy prices. In fact, consumers not only cut back on other spending, but also hope to save some money on food.

“In Walmart’s U.S. business, we’re seeing middle- and upper-income customers coming to Walmart seeking value. As expected, customers are looking to save money when it comes to food and consumables,” Walmart CEO Doug McMillon said on a call with investors.

Walmart caters to the shopping needs of budget-conscious consumers, and more middle- and high-income customers shopped at Walmart in the second quarter.

Walmart ’s reputation as a discounter is attracting more middle- and upper-income shoppers , with about three-quarters of its grocery market share gains coming from customers with annual household incomes of $100,000 or more in the second quarter ended July 31, Chief Financial Officer John David Rainey said . Most of that sales came from its U.S. e-commerce business, which grew 12% in the quarter .

Wal-Mart is seeing budget-constrained consumers making choices about quality and quantity, he said . It's clear that consumers are being affected by rising energy, food and housing prices. For example, shoppers are increasingly using credit cards instead of debit cards. They're choosing smaller packages of food and buying canned tuna and beans instead of deli meats and beef.

Walmart's private-label products, which typically have lower costs, are now growing at twice the rate they did in the first quarter, Rainey said.

Against the backdrop of global inflation, more middle- and high-income families are shopping at Walmart. "We expect this consumption pattern to persist, and we are adapting to this reality so that we can provide them more help," said Doug McMillon.

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