- Walmart has just announced results for a triumphant quarter with a 9.2% increase in sales compared to last year.
- This is despite the fact that inflation has led to rising prices throughout the retail industry.
- High prices can lead more consumers to choose cheaper options such as those offered at Walmart.
Walmart announced strong results in its third-quarter earnings call on Tuesday, even as consumers experience sticker shocks in stores over rising inflation. The retail giant saw sales increase by 9.2% in the US compared to last year. Comparable transactions also increased by 5.7 per cent.
Inflation is currently rising at the fastest rate since the 1990s, and rising prices have frayed nerves throughout business. But for discount retailers, this trend can be a bit of a blessing.
Consumers are looking for cheaper options in the midst of price increases, and Walmart’s much talked about mission is: “Save people money so they can live better.” Overall, the U.S. Census Bureau found that retail sales in October increased 1.7% year-on-year from September and 16.3% year-over-year.
Philip Melson, client partner at Fractal Analytics, told Insider that “inflation is definitely a bit of a double-edged sword for
, “although discount retailers are likely to see customers” come through their doors as they search for better deals.
“The question then becomes whether these discount retailers can keep prices low enough to still provide the value they have been known for,” Melson said. “In Walmart’s case, the company seems to be convinced that it has the necessary scale to absorb inflation well enough not to pass on significant price increases to their customers.”
Walmart’s grocery category saw a high increase in single-digit sales compared to last year, which Walmart executives said showed “strong market share increases” and “low-to-mid single-digit ticket inflation.” Meanwhile, Sam’s Club saw sales increase by 19.8% year-on-year, largely thanks to “double-digit transactions and solid ticket growth, as well as a benefit from stimulus spending and inflation.” Managers predicted a 5% increase in sales over the holidays this year.
“Looking ahead, we have the people, products, and prices to deliver a great holiday season for our customers and members,” said Doug McMillon, Walmart’s president and CEO, in a statement at the dealer’s earnings presentation.
Concerns about shortages may also have benefited Walmart and other dealers. The National Retail Federation found that retail sales increased in October, “when many consumers started shopping on vacation early to avoid shortages.”
“Concerns about high prices are weighing on consumer sentiment, but it has not held back spending,” NRF chief economist Jack Kleinhenz said in a statement sent to Insider. “As it has done for more than a year and a half, COVID-19 remains a significant factor should there be an increase in coronavirus infections that could cause a downturn in spending.”