If you want a window into the health and habits of the American consumer, look no further than Walmart. On Tuesday, the retail giant surprised investors and analysts by beating expectations for earnings and revenue, just three weeks after cutting profit expectations.
Walmart has reported seeing a significant shift in spending habits with Americans moving away from discretionary purchases like electronics and apparel, focusing instead on necessities like food. But some of the company’s second quarter gains came from higher prices on items like food. Grocery prices nationwide are up 13.1% on the year, according to consumer price index data for July.
“Inflation is having an impact, particularly for those that don’t have as much money, so we see them behaving in different ways,” CEO Doug McMillon told CNBC Tuesday. “But we’re also attracting a lot of new customers to our stores, to our app, to our website. Higher-income families are shopping at Walmart because they’re so price sensitive right now.”
According to the company, most of its gains in the food aisle came from families making over $100,000 per year.
“I think people are really price focused right now regardless of income, and the longer this lasts, the more that’ll be the case,” McMillon said.
For the second fiscal quarter, total sales grew more than 8% while e-commerce sales grew 12% compared with the same period a year ago.