Walmart shouldn’t count on keeping the affluent customers it has recently gained, the retailer’s former U.S. CEO Bill Simon said Thursday (May 16).
Speaking on CNBC’s Fast Money, Simon said that when the economic situation picks back up, affluent shoppers will go back to retailers that provide a premium experience, CNBC reported Thursday.
Currently, Simon said, factors like food inflation have led these shoppers to go to Walmart for convenience, cost and assortment. But as inflation recedes over the next two years, affluent consumers will leave discount retailers in favor of ones that provide more service.
“As the economic challenges abate … service will become more important than convenience and price. And, we’ll see a shift back of some of the consumers,” Simon said.
Simon served as president and CEO of Walmart U.S. from 2010 to 2014. He is currently on the boards of Darden Restaurants, Hanesbrands and Pitney Bowes, according to his biography on the Hanesbrands investor relations website.
This report came on the same day that Walmart reported better-than-expected first-quarter earnings and upgraded its forecast for growth this year.
Speaking Thursday during the retailer’s quarterly earnings call, Walmart CEO Doug McMillon said the retailer has been adjusting its business model to drive long-term revenue growth.
“We’ve been known for price forever, but we’re increasingly known for convenience,” McMillon said. “So whether the environment is inflationary, or deflationary, whether customers have more money or less money, if we’re doing a good job on the items and the service we provide, saving them money with pickup and delivery for example, we can continue to grow share.”
Both Walmart and its rival Amazon have been setting their sights on high-income consumers while also working to retain their lower-income customers, PYMNTS reported Friday (May 17).
In the case of Walmart, the retailer is pursuing a Walmarche strategy that includes piloting a new merchandise mix and fancier displays aimed at higher-income shoppers.
Overall, Walmart’s shoppers are roughly evenly distributed across three income brackets: less than $50,000 a year, between $50,000 and $100,000, and more than $100,000, according to the PYMNTS Intelligence’s “Whole Paycheck Report: Amazon Extends Its Lead Over Walmart in Retail Spend.”
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