It looks like high-income shoppers are becoming increasingly loyal to Walmart

• More wealthy Americans are turning to Walmart for non-food items, executives said Tuesday.
• Walmart's CFO said that the retailer's convenience resonates with people regardless of the size of their paycheck.
• An analyst noted that this could be because shoppers were looking to get cheap holiday deals.

Wealthy Americans aren't just shopping at Walmart for cheap groceries.

More high earners are turning to the retailer for general merchandise, CFO John David Rainey told investors on Tuesday during its Q4 fiscal 2024 earnings call. This includes products like apparel, electronics, and homeware.

"In the quarter we gained share in virtually every category," he said. "But notably, one of the biggest contributors in the quarter was in this income demographic from households that make more than $100,000 a year."

"For general merchandise as an example, two-thirds of the share gain that we had in the quarter was through this income demographic and digital channels," Rainey continued.

He said that customers were attracted by the convenience Walmart offered as well as its prices.

"And that resonates to people regardless of the size of your paycheck," Rainey said. "Our value proposition is resonating with customers."

Neil Saunders, managing director of GlobalData Retail, said in a note to clients that Walmart was trying to boost sales of non-food merchandise among higher-income consumers.

"We are seeing some initial evidence that the strategy is working," Saunders said, though he noted that this could be because shoppers were looking to get cheap holiday deals.

Walmart executives have previously said that wealthier shoppers turned to the retailer in recent years as part of a bid to save money amid high inflation and that the company was retaining these customers.

Walmart is cutting prices on essentials like eggs and bread

Inflation has cooled in recent months after soaring during the pandemic. Prices for food at home rose just 1.3% throughout 2023, according to data from the Bureau of Labor Statistics, compared to 11.8% in 2022 and 6.5% in 2021.

CEO Doug McMillon said that Walmart's prices for general merchandise, like apparel and hardlines, which includes toys and electronics, were lower than a year ago.

The prices of some foods, like eggs, apples, and deli snacks, were lower than during the previous year, but asparagus and blackberries cost more, McMillon said.

Dry groceries and consumables, including paper goods and cleaning suppliers, were up in the mid-single digits year-over-year and in the high teens over a two-year period, he said.

John Furner, president and CEO of Walmart US, said that the retailer had rolled back the price of its 14-ounce French loaf to $1 after putting it up due to high inflation. Walmart's website says that the bread was previously listed as $1.47.

"We're seeing results of that running about 40% over last year, so customers immediately responded," Furner told investors.

Demand for own-label products has grown, McMillon said. Shoppers typically trade down from big-name brands during times of economic crunch.

But Saunders said in his note that sales growth at Walmart had been decelerating over the last 18 months.

"Some of this is the result of customer acquisition becoming more modest, and some is because of the continued financial pressure on core Walmart shoppers which is seeing them cut back on non-essential spending," he wrote. "Unfortunately, we do not see either of these factors abating in the year ahead."

Saunders noted that lower levels of inflation would make it harder for Walmart to acquire new customers. "This essentially puts Walmart in the position of having to work far harder and more creatively to generate growth," he wrote.