Lower-income Americans have been hardest hit by US inflation at a four-decade high. The results of Walmart show that those with bigger wallets are getting squeezed, too.
The nation's largest retailer, which caters to budget conscious shoppers, said it saw more middle and higher-income customers shop at Walmart during the second quarter, a shift it said was different from previous economic downturns.
In Walmart's US business, we have seen mid- to higher income customers come to Walmart looking for value. Walmart's chief executive officer Doug McMillon said on an investor call that food and consumables are some places where they're looking to save some money.
The Bentonville, Arkansas-based retailer said the company grew market share in the grocery segment during the second quarter of July 31, with three-quarters of the gains coming from shoppers with incomes over $100,000. The company did not provide any additional information on its market share gains.
Most of the sales came from its US e-commerce business, which grew 12% during the quarter, and helped the retailer post better than expected sales and lift its full-year profit forecast.
In the United States, Walmart's online grocery market share increased to 55% in the month of June from 52% in March.
The share of Instacart dropped to 27% from 28%, Amazon's declined to 7% from 8% and Kroger's share fell from 9% to 8% during the same period, according to data from research firm YipitData.
The data shows that Target's online delivery service Shipt lost market share during the period. Walmart's US Chief Executive John Furner said on an investor call that the attraction to Walmart is different from the financial recession of 2008-09, when it had a smaller e-commerce business and didn't offer many of its current services.
He said in-store pickup, delivery from stores and its Walmart InHome business - a service that delivers groceries right to a shopper's refrigerator - were key to attracting the higher-income consumer.
Furner also attributed some of the new customer growth to the nearly two-year old Walmart membership program.
Walmart is offering a wide variety of incentives, including free shipping on orders over $35 and discounts at gas stations, which is a big deal compared to Amazon's $139 annual Prime subscription.
Furner said that the ability to serve customers in a more flexible manner than what we could have 13, 14 years ago was pretty dramatic.
We have a number of ways that we can serve customers today that did not exist the last time we went through a downturn. CFO Rainey said the retailer is more relevant to a wider group of people after it started allowing third-party sellers to offer products on Walmart.com.
It added millions of products to its website - from 10 million five years ago to more than 240 million now.
It's a fairly meaningful growth and we aspire to sell more general merchandise to more households, including higher income ones.