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Walmart is thriving among wealthier shoppers, but for lower-income customers, the situation is more challenging, according to CEO Doug McMillion.
Speaking at the Economic Club of Chicago on Feb. 27, McMillion explained that persistent high food prices are causing “frustration and pain” for many shoppers, particularly those “at the lower end of that scale.”
Adding to this pressure, President Donald Trump’s looming tariffs – set to take effect on March 4 – could make things worse. The tariffs would impose a 25% hike on imports from Mexico and Canada and a 20% increase on imports from China, up from the previously estimated 10%.
Consumers, already stretched thin by rising costs, are being forced to make difficult choices, and Walmart (WMT-1.73%) is seeing this firsthand. Customers are “buying smaller packs of consumer goods,” McMillion said.
A major driver behind this inflationary pressure is the soaring cost of food, particularly eggs. In Jan. 2024, inflation hit its highest level since Aug. 2023, largely due to sky-high prices of eggs, according to the U.S. Labor Department’s Consumer Price Index (CPI). The ongoing bird flu crisis, which has wiped out millions of chickens, continues to exacerbate the supply shortage and drive up costs.
The situation is expected to worsen, with further price pressures on the horizon. Walmart is among those warning of the challenges ahead. In Nov. 2024, Walmart CFO John David Rainey said the retailer would likely pass the price onto consumers if the tariffs go into effect. “We never want to raise prices,” he told CNBC (CMCSA-0.18%) at the time, “but there will be cases where prices will go up for consumers.”
In Feb. 2025, Walmart issued a cautious forecast for the year, warning that 2025 would likely not see the same level of massive gains it saw in 2024. The gangbusters year was driven by shoppers earning above $100,000 annually, who accounted for 75% of the company’s market share growth.
Walmart recently lost its revenue crown to Amazon (AMZN-4.15%). McMillion acknowledged that competition is fierce on a podcast episode for Bloomberg’s Big Take. However, the CEO emphasized that rather than trying to stamp out the competition, Walmart is learning from it – hiring former talent from Amazon and Google (GOOGL-2.28%) – while also working to win over the president.