Affluent shoppers really like buying things online.
It’s not surprising that shoppers are turning to Walmart for food as grocery prices soar. At the same time, the budget-friendly store is attracting more middle- and higher-income shoppers.
During the three months ending July 31, about three-quarters of Walmart’s market share gains in the grocery segment came from customers with annual household incomes of $100,000 or more, Walmart’s chief financial officer John David Rainey told CNBC.
Part of the reason for this? Online shopping. During the 2008 recession, Walmart had a small e-commerce business, but the company didn’t provide delivery from stores, said John Furner, president of Walmart US, on a conference call with analysts and investors this week. Walmart got its jumpstart in e-commerce after buying Jet.com for $3.3 billion in 2016. Two years later, the company began offering delivery via Jet.com, before it was absorbed into the store the following year. Walmart also offered delivery via JetBlack, a personal shopping service, that ended in 2020. The investment in e-commerce has paid off. Now, Walmart makes up 55% of the online US grocery market, according to YipitData, a market research firm.
The retail giant continues to expand ways shoppers can receive their purchases, such as offering Walmart InHome, which allows delivery workers to bring groceries inside a customer’s home, and Walmart+, a delivery service membership. “[W]e definitely have a number of ways that we can serve customers today that just, quite frankly, did not exist the last time we went through a downturn,” said Furner.
In July 2021, sales from Walmart’s wealthy shoppers surpassed customers who are in the $25,000 to $45,000 income bracket, according to data from YipitData, which tracks credit and debit card transactions.
Higher-income people always spend the most per trip or order, but Sucharita Kodali, an analyst at Forrester, a market research firm, said she is surprised that the share of sales by the most affluent shoppers is this high. The data has a bias toward middle- or upper-income as well as coastal and suburban shoppers, noted YipitData, as the banking entities that partners with the company’s data vendors have a higher share of customers who tend to be those areas; higher-income households are also more likely to use their credit cards than lower-income households. Kodali also said that Walmart has many shoppers who are cash-only or unbanked, which isn’t represented in the data.
Still, the growth in sales from the most affluent shoppers comes as more of Walmart shopping takes place online, where wealthy shoppers tend to be, said Kodali. For the affluent shopper, time is money, and Walmart is succeeding in making shopping more efficient.