Target is losing its high-income shoppers to Walmart
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Walmart is on a roll, reeling in shoppers who previously spurned the retailer, pounding rival Target and mounting a serious challenge to Amazon's digital turf.
Why it matters: Already the world's biggest company by revenue, Walmart is nonetheless growing and transcending its previously down-market reputation.
- And the holiday shopping season — including the Black Friday and Cyber Monday weekend — poses an opportunity for the company to capitalize further on its rip-roaring momentum.
The big picture: The Bentonville, Arkansas-based retailer is expanding its appeal beyond middle America, mirroring the same sort of realignment sweeping through American politics and culture.
- In the same way that more educated, blue-state Americans gave Donald Trump a second look during the 2024 election, many high-income shoppers — who previously might've shopped elsewhere — are flocking to Walmart's 4,600 U.S. stores.
- 75% of Walmart's market share gains in the last quarter came from households earning more than $100,000 a year, the company said.
- The "sniffiness" with which many in the "chattering class" once treated Walmart has faded, as GlobalData retail analyst Neil Saunders put it to Axios.
State of play: Faced with soaring prices in recent years, many shoppers have been deal hunting — including wealthier folks.
- During the inflation crisis, the company wielded its size and savvy to keep a lid on prices — and now that inflation is back to normal, the retailer is still winning over shoppers who are seeking out affordable groceries and sharp general merchandise.
Between the lines: It doesn't hurt that rival Target is flailing, having posted same-store sales declines in four of the last six quarters. The Wall Street Journal wrote Tuesday about Target's "slide from cheap chic to dull chore."
- At the same time, Walmart's increasingly competitive e-commerce division is making it more appealing to higher-income buyers, CFRA Research analyst Arun Sundaram tells Axios in an email. And its stronger assortment of general merchandise is making a dent as well.
- "Walmart sells more groceries and everyday essentials, while Target sells more discretionary goods," Sundaram says. "In this environment, consumers are shifting more of their budget to needs rather than wants."
And in another rich-get-richer development, Walmart is suddenly reaping meaningful revenue from advertising on its website, with product sellers eager to sponsor listings to snatch buyers — a page directly out of Amazon's playbook.
- "These are much higher margin revenue streams than the goods Walmart sells inside its stores and online," Sundaram says.
The intrigue: Walmart said Monday it will pull back on diversity initiatives and remove some LGBTQ merchandise from its website, CNBC reported, a move that could have repercussions for that blue-state growth.
The bottom line: Walmart's stock was up 68% for the year through Monday, while Amazon was up 34% and Target was down 9%.
Editor's note: This story has been updated with details on Walmart's DEI initiatives.
