The Real Reason Walmart Is Struggling To Lure Budget Shoppers
Walmart has long reigned supreme among budget grocers. In fact, as of March of 2022, it sold more groceries than anyone else in the United States (as per Progressive Grocery). Walmart stores started offering groceries way back in 1988. Thirty-four years later the retail giant garners a whopping 60% of its income from grocery sales.
Logically, the company's sheer size should give it an advantage. Walmart operates a mind-boggling 5,342 locations nationwide. Now, admittedly, 600 of those are Sam's Clubs, which is owned and operated by Walmart. However, even if you remove Sam's Club, there are still 4,742 retail stores in the U.S. bearing the Walmart moniker. According to Walmart's chief merchandising officer, 90% of Americans live within 10 miles of a Walmart. When you look at those numbers, it's almost surprising that the percentage isn't higher.
And yet somehow, despite their reputation for low prices and their absolutely enormous footprint, Walmart is losing sales and losing shoppers. So what gives? Is it the apocalypse? Are tanking sales the real reason Walmart just laid off hundreds of employees?
Walmart losing customers: trajectory or tragedy?
While Walmart losing some customers isn't likely a tragedy (unless one is very heavily invested in Walmart stock, and even then ...), it is alarming. According to CNBC, its massive size and substantial market share make Walmart a barometer for the nation's economy as a whole. So any trends we're seeing in Walmart, are likely reflected in your neighborhood grocery store as well.
That is, unless your neighborhood grocery store is Aldi, Trader Joe's, or a Dollar General, as these stores are picking up Walmart's missing customers (per the Wall Street Journal). Traditionally, Walmart flourishes during inflation as newly cash-strapped families look for ways to stretch their money and turn to Walmart's famously low prices to do so (as per Progressive Grocery). However, this inflation cycle has been different. When gas prices soared above $5 a gallon, many shoppers switched closer to home or to even cheaper grocery options rather than blowing gas on a trip to the superstore (via Reuters).
While Walmart may have the reputation of being the cheapest in the land, the truth is that when it comes down to Walmart vs. Aldi for prices, Aldi wins (via Aisle of Shame). Though Walmart's foot traffic fell this summer over what they saw this time a year ago, Aldi's increased 11.5% between June 1 and July 25. It can only be presumed that customers haven't returned to Walmart as gas prices drop because they've found better prices elsewhere.