Walmart sees shift in consumer behavior

There are a few things you can do to feel confident when you walk into Walmart.

First, you’ll likely find an impressive array of products, whether it’s potatoes, paper plates, or a last-minute toy from your birthday party that you forgot about.

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

Walmart has built its business model around affordable products and great deals. When people see the name “Wal-Mart,” they think “value.” This has been a winning formula for the big box store for years.

But catering to budget-conscious consumers may no longer be a good fit for Walmart.

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Today, consumers are slashing spending to cope with higher costs.

In November, the consumer price index rose 2.7%. But this comes after months of uninterrupted growth.

In early December, Moody’s chief economist Mark Zandi told Fortune magazine that many Americans are “already living on the edge financially.” Therefore, they are limited in how much they can spend on items that are not absolutely necessary.

As low-income consumers are forced to reduce their discretionary purchases, Walmart is forced to start focusing on a different type of customer. Its efforts appear to be paying off. But that’s not necessarily a good thing.

Wealthy customers increasingly shop at low-price retailers such as Walmart.Shutterstock

Walmart is apparently tired of being viewed as a low-cost retailer. Focusing on high-income shoppers has been a big part of its success lately.

Walmart’s latest quarter results beat analysts’ expectations. The company reported overall sales growth of 5.9%, with adjusted operating income rising even faster, to 8%.

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

“As wallets are stretched, you’re going to see more consumer dollars being spent on necessities rather than discretionary items,” Walmart U.S. Chief Financial Officer John David Rainey said on the company’s last earnings call.

“We’ve done a great job improving our product offerings to meet the needs of affluent customers,” Rainey said.

Rainey also emphasized this strategy at the Morgan Stanley Global Consumer & Retail Conference in December, noting that one of Walmart’s best-selling items recently has been AirPods.

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Rainey said the product “is not typically thought of as something you would buy at Walmart,” noting that it would be “more appealing to more affluent customers.”

He also said, “I think this is indicative of the changes that are happening at Walmart and the changes that are happening in our customer base. We will continue to grow and gain share among high-income people.”

At a time when consumers are nervous about spending money, Walmart clearly needs to pivot.

Consumer confidence reached its lowest point since April in November, according to a recent survey by The Conference Board. The survey also found that plans to buy big-ticket items over the next six months fell in November.

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If Walmart can’t count on typical shoppers buying these big-ticket items, it has to launch higher-priced products and hope affluent consumers come in and buy them. But if Walmart moves away from its famously low prices, it could leave low-income consumers with one less place to shop.

“When I hear about affluent customers shopping at off-price retailers like Walmart and TJX, it worries me because it’s a sign that things are getting more expensive all around,” shopping expert Trae Bodge told NBC News.

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

Dollar Tree has been raising prices as part of its strategy to introduce a wider variety of products. The company has seen an increase in consumers making more than $100,000 in annual purchases at its stores.

Dollar General is also seeing growth among higher-income shoppers.

But experts like Boch say the increase in affluent consumers shopping at off-price retailers is a red flag. “Obviously, if you’re wealthier, you can afford to buy what you need,” Boch told NBC News.

“But if you go for lower prices, where do the lower-cost consumers go?”

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This article was originally published by TheStreet on December 20, 2025, and first appeared in the Retail section. Click here to add TheStreet as your preferred source.