Walmart is attracting wealthier customers by selling knockoffs of expensive products
Since its inception, Walmart has been a beacon for bargain shoppers. But now the retailer known for its low prices is attracting a new demographic: customers making more than $100,000 a year.
Walmart, the world’s largest retailer, reported a strong third quarter—and the company’s chief financial officer partly blamed this new customer base for boosting sales. Revenue was just under $170 billion, in-store sales were up 5.3%, foot traffic was up 3% — but the big difference was e-commerce sales, which were up 22%. .
“We had a really successful quarter,” Walmart Chief Financial Officer John David Rainey speak Yahoo FinanceAdditionally, the company achieved gains across all product categories and income groups. About 75% of its equity returns come from households earning more than $100,000 per year, Rainey said. Amazon And Target.
A spokesperson said Walmart notes two aspects of the company that are “helping create intrinsic appeal” from higher-income customers. Luck. One is convenience; Walmart offers delivery and pickup options to customers “in a way that no other retailer” does, the spokesperson said. Another benefit for Walmart is increasing the number of items it offers, which “attracts customers who may not have shopped with us before,” the spokesperson said.
This is a continuation of a trend that Walmart CEO Doug McMillon highlighted last quarter.
“We also see higher engagement across income groups, with high-income households continuing to account for the majority of profits, even as we increase revenue and share across households. middle- and lower-income families,” McMillon said on Walmart’s earnings call. August.
Walmart has mastered fraud
Although Walmart has long been known for its super low prices, it has also become a haven for “scammy” shoppers. Replicas are basically just cheaper versions of expensive products that look almost identical. Some dupes don’t live up to the quality of luxury or aspirational brands, but others get the job done at a lower price without sacrificing too much comfort.
Gabby Jones—Bloomberg/Getty Images
“Walmart’s change isn’t just about lower prices; it’s about redefining ‘value’ to include quality that wealthier customers can’t afford to ignore,” said Kaveh Vahdat, founder and president of fractional CMO services firm IncreaseOppspeak Luck. They have combined premium products with their signature affordability, making it socially acceptable for higher-income shoppers to say, ‘I bought this at Walmart.’ ”
Even more than the “social acceptance” of shopping at Walmart, the spokesperson said the company has observed customers taking pride in shopping at the discount retailer.
“No matter your budget, we have something to offer,” a Walmart spokesperson said. “It can make people feel really proud of what they’re putting on the table, the food, the clothing or the makeup they’re buying, from a beauty perspective.”
Some of the things Walmart has done best in the world of counterfeit goods are household goods. Social media influencers share their best finds at the off-price retailer that looks almost identical to ambitious brands like Pottery Barn and Crate & Barrel. Take the Edgewood Chair, for example, which retails at Pottery Barn for a whopping $1,049. At Walmart, you can buy a similar one for just $139, one TikTok user shared.
“To attract more affluent customers, Walmart also introduced several high-end product lines, such as its new luxury home goods brand Bettergoods,” Greg Zakowiczsenior ecommerce specialist at marketing automation platform Send togetherspeak Luck. Bettergoods is where customers find many knock-offs of more expensive brands. “In recent years, they have also invested heavily in remodeling stores, upgrading lighting systems and placing more emphasis on premium products on their shelves.”
The Walmart spokesperson added that the company’s apparel division has also been successful, highlighting Walmart’s collaboration with fashion designer Brandon Maxwell. A specific example of a popular Walmart dupe product is the Scoop jacket and coat, which retail for around $60. They are knockoffs of Max Mara costumes, selling for thousands of dollars.
“These items look pretty impressive, and they’re really great prices,” a Walmart spokesperson said.
Does Walmart surpass Target?
Walmart and Target are both famous for their supermarket appeal, where you can buy anything from clothes to groceries to household items. But Target generally attracts a slightly more affluent demographic, with Price is a bit more expensive than Walmart.
But now that Walmart has seen a growing number of shoppers who make more than $100,000 per year, it raises the question of how different Walmart is from Target—and whether Target should worried or not.
“While Walmart has made significant gains among wealthier shoppers, it hasn’t necessarily surpassed Target,” Zakowicz said. “Walmart’s core business is still in low-income households, so unless they completely change their strategy – this won’t change.”
Plus, experts say Walmart’s low-price appeal is still enough to differentiate itself from Target, especially during times of inflation.
Walmart’s success with the wealthy is “the perfect storm of economic anxiety and a strategic shift,” Vahdat said. “When even the wealthy want to ‘spend smart,’ Walmart’s expanded offerings consider it both practical and surprisingly desirable.”
To be sure, Target is also doing well financially, seeing Q2 revenue increase 2% and expected to report Q3 results on Wednesday, thanks to growth in several categories. sell.
Brian Cornell, president and CEO of Target Corp. said in a statement announcing the company’s second-quarter earnings: “We also see improving trends across our discretionary categories, most notably apparel, and we are seeing continued strength.” in the field of beauty”.
Retail and e-commerce experts also say these are the categories where Target outperforms Walmart, including apparel and beauty.
“Target has invested heavily in creating high-quality, fashionable clothing that appeals to fashion-conscious shoppers, while Walmart’s clothing segment, while improving, is not yet a competitor. direct competition,” said Mario Sarceno, founder of Founder of PRspeak Luck.
Target did not immediately respond to a request for comment Luck.
