- Walmart just posted results for a triumphant quarter with a 9.2% rise in sales over last year.
- That’s despite the fact that inflation has led to rising prices throughout the retail industry.
- High prices may prompt more consumers to opt for cheaper options like those offered at Walmart.
Walmart posted strong results in its third quarter earnings call on Tuesday, even as consumers experience sticker shock in stores over rising inflation. The retail giant saw sales soar 9.2% in the United States, compared with last year. Comparable transactions were also up 5.7%.
Inflation is currently rising at its fastest rate since the 1990s, and the rising prices have frayed nerves throughout the business world. But for discount retailers, this trend may be a bit of a boon.
Consumers are seeking out less expensive options amid the price hikes, and Walmart’s much-touted mission statement is: “Save people money so they can live better.” Overall, the US Census Bureau found that retail sales in October rose 1.7% 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-edge sword for the retail industry,” although discount retailers will likely see customers “come through their doors as they look for better deals.
“The question then becomes whether or not 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 confident that it has the scale necessary to absorb inflation well enough to not pass on significant price increases to their customer.”
Walmart’s grocery category saw a sales spike in the high single digits over last year, which Walmart executives said showed “strong market share gains” and “low-to-mid single digit ticket inflation.” Meanwhile, Sam’s Club saw sales soar by 19.8% over last year, largely thanks to “double-digit transaction and solid ticket growth, as well as a benefit from stimulus spending and inflation.” Executives predicted a sales increase of 5% during the holidays this year.
“Looking ahead, we have the people, the products, and the prices to deliver a great holiday season for our customers and members,” Doug McMillon, Walmart’s President and CEO, said in a statement in the retailer’s earnings presentation.
Concerns over shortages also may have benefitted Walmart, and other retailers. The National Retail Federation found that retail sales spiked in October “as many consumers began holiday shopping early to avoid any shortages.”
“Concerns about high prices are weighing on consumer sentiment, but that has not held back spending,” NRF Chief Economist Jack Kleinhenz said in a statement sent to Insider. “As it has 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 pullback in spending.”