Inflation has come down from multi-year highs but remains elevated, which hurts Main Street.
According to a recent Gallup survey, inflation is currently causing financial hardship to 55% of U.S. households, the same as last August. In addition, 13% of Americans say inflation is causing severe difficulties for their families.
The persistently high percentage of Americans still suffering from inflation confirms that the old villain’s impact on families is widespread. It expands to middle- and higher-income households, who are compelled to shop in everyday discount retailers like Walmart.
Consumers who used to shop at the retail giant intermittently are now shopping there regularly, according to statements made by CEO Doug McMillon in the company’s recent earnings reports.
“The combination of a looming recession and stubbornly high inflation is hitting consumers’ wallets hard and impacting their purchasing decisions,” said Sean Turner, co-founder and CTO of Swiftly. “So it’s not surprising that an increasing number of shoppers are evaluating the retailers they shop at more carefully and prioritizing those offering discounts and savings that meet their shrinking budgets.”
Turner points to a recent Swiftly survey, which provides further evidence of families’ difficult situation these days. Nearly 69% of consumers struggle to pay their grocery bill, and almost 83% of consumers now rely on some form of coupon, rewards app, or loyalty program to offset higher costs.
“Today’s budget-friendly stores are catering to shoppers and winning their dollars by offering a wide variety of products, including brand name products and private-label brands, at extremely competitive prices, as well as delivering personalized coupons and rewards through loyalty programs,” Turner said.
Dennis Shirshikov, head of content at the real estate investment site Awning, said there are also other reasons luring customers to Walmart.
“While inflation and low prices can appeal to middle-class Americans, other factors, such as competition and consumer preferences, can also affect Walmart’s position as a shopping destination,” he said.
Levon Galstyan, an accountant at Oak View Law Group, noted the many factors that drive middle and high-income Americans to Walmart stores.
First, Walmart has been able to keep food and other everyday items as cheap as possible. “Walmart was able to do this because, as the biggest food store in the US, it has a significant influence over its suppliers, which helps it get the best deals,” Galstyan said.
Second is a shift in consumer preferences, from name brands to cheaper private label brands, with Walmart leading the way.
Third, there’s Walmart’s scale. “During the supply-chain crisis, Walmart’s scale helped them keep critical items in stock and thus retain their customer base,” Galstyan said.
Fourth, Walmart has benefited from merging traditional retail commerce with e-commerce. Customers can order online and pick up the merchandise from Walmart’s stores.
Fifth is Sam’s Clubs, which offers discounted fuel on the premises, enticing customers.
“In short, Walmart has done an excellent job of positioning itself as a one-stop shop with lower prices on essentials and all the features that customers want from a retailer,” Galstyan notes. “Walmart has turned into a shopping destination of middle-class America for everyday household essentials and food. “