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Walmart sees a change in consumer behavior

When you go to Walmart, there are a few things you can feel confident about.

First, you’ll find a pretty impressive array of products, whether it’s potatoes, paper plates, or those last-minute toys for that birthday party you forgot about.

Another thing you can usually count on from Walmart is impressively low prices.

Walmart has structured its business model around affordable products and great deals. When people see the name “Walmart,” they think “price.” And that has been a winning formula for many years for the big box giant.

But catering to budget-conscious consumers may not cut it for Walmart.

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Consumers are cutting back heavily these days to cope with higher costs.

In November, the consumer price index rose 2.7%. But that comes on the heels of several months of growth without a break.

In early December, Moody’s chief economist Mark Zandi told Fortune that many Americans are “living on the financial edge.” As such, there is a limit to how much money they can spend on items that are not absolute needs.

Because low-income consumers are forced to cut back on discretionary purchases, Walmart is forced to focus on a different type of customer. And its efforts seem to be paying off. But this is not necessarily a good thing.

Wealthier customers are increasingly shopping at low-price retailers like Walmart.Shutterstock

Walmart is clearly tired of being viewed as a budget retailer. And recently, focusing on high-income shoppers has been a big part of its success.

Walmart’s most recent quarter exceeded analysts’ expectations. Sales rose 5.9% overall, and adjusted operating income rose even faster at 8%, the company reported.

Related: Costco quietly drops prices on key items

But Walmart attributes much of that growth to higher-income shoppers.

“With pocketbooks stretched, you’re seeing more consumer dollars going toward essentials versus discretionary items,” Walmart U.S. CFO John David Rainey said on the company’s last earnings call.

“We’ve done a good job of improving our assortment,” Rainey said, to cater to affluent customers.

Rainey also doubled down on that strategy during Morgan Stanley’s Global Consumer and Retail Conference in December, pointing out that one of Walmart’s best-selling items recently was AirPods.

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Rainey called the product “something you wouldn’t normally think of buying at Walmart” and pointed out that it was “more attractive to a very affluent customer.”

He also said, “I think it’s a sign of how Walmart is changing and how our customer base is changing. And we continue to grow and engage with this high-income demographic.”

At a time when consumers are worried about spending money, it’s clear that Walmart needs to pivot.

In November, consumer confidence hit its lowest point since April, according to the latest Conference Board survey. The survey also found that plans to buy big-ticket items over the next six months fell in November.

Related: Home Depot issues dire warning on housing market, economy

If Walmart can’t rely on its general store to buy those big-ticket items, it will have to offer value-added products and hope that affluent consumers will come in and buy them. But if Walmart strays too far from the low prices it’s known for, it could leave low-income consumers with fewer places to shop.

“It worries me when I hear that affluent customers are shopping at low-price retailers like Walmart and TJX because it’s a sign that things are getting more expensive all around,” shopping expert Trey Bose told NBC News.

Worryingly, it’s not just Walmart that’s trying to attract higher-income shoppers with inventory changes. Other budget-friendly retailers are taking a similar approach.

Dollar Tree has been raising prices as part of a strategy to introduce a broader product assortment. The company has seen an increase in consumers spending more than $100,000 a year in its stores.

Dollar General also saw growth in high-income shoppers.

But experts like Bose say the rise of affluent consumers shopping at budget retailers is a red flag. “Obviously, if you’re very rich, you can afford the things you need,” Bose told NBC News.

“But if you’re looking for low prices, then where does the low-cost consumer go?”

Related: BBQ chain closes half of its restaurants, files Chapter 11

This story was originally published by TheStreet on December 20, 2025, where it first appeared in the Retail section. Add TheStreet as a preferred source by clicking here.

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