Walmart customers act so weird it makes their bosses ‘sit on their chairs’

Walmart President and CEO Doug McMillon

People are choosing deals, Walmart President and CEO Doug McMillon said. Derek White – Getty Images for Operation HOPE, Inc.

The current state of the economy has understandably left consumers confused, and leaders of major corporations appear to be equally confused about consumer trends.

Expectations about U.S. spending for the remainder of 2023 through 2024 vary among industry experts.

Bank of America CEO Brian Moynihan asserts that shoppers remain relatively stable, while Wells Fargo CEO Charlie Scharf goes a step further, noting that consumers are “still very strong.” On the contrary, some experts, such as Wharton professor Jeremy Siegel, expect a significant decline in consumers after the summer season.

According to Walmart, a useful barometer of U.S. shopping tendencies as a provider of staple and discretionary goods, it’s a combination of all of the above. But even Walmart is grappling with the implications of the next 12 months.


Consumers behaved so strangely in October that bosses “were sitting on their chairs,” John David Rennie, Walmart’s chief financial officer, said at the Morgan Stanley Global Consumer and Retail Conference on Wednesday.

He continued that spending patterns during the last two weeks of October were particularly “puzzling” compared to previous months, although he said he did not intend to be “alarmist” in any way.

Unfortunately for Rennie, Wall Street may already be panicking. The retailer’s stock price has fallen this month: down 7% After a sharp decline following the group’s third-quarter earnings call.

On the mid-November call, Rennie first alluded to changing consumer behavior, saying, “We see our customers showing an appreciation for continuing to look for value to manage within their household budget.”

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This week, Rennie sought reassurance Reuters He stated that the “erratic” behavior of shoppers and deflationary price pressures had not caused Walmart, a $415 billion company, to rethink its long-term plans.

Customers are becoming increasingly price sensitive

Customers may still be spending en masse — the 2023 Black Friday period broke records after Americans spent $9.8 billion on merchandise — but individuals are becoming increasingly wary of price tags on everyday items, Walmart’s CEO said.

On the same day as Rainey’s update, Walmart CEO Doug McMillon I sat down with CNBC For a more in-depth discussion about shopping habits. “Customers in general are really sensitive right now. They’re prioritizing their orders, and they know there’s a possibility that prices will be lower right before Christmas or right after Christmas with clearance, so that’s what we expect to happen.”

Previously, Wall Street giants said they were seeing a significant decline at the lower end of the income spectrum. For example, Jane Fraser, CEO of Citigroup, said earlier this year that “cracks” were starting to appear in consumers who earn less.

That’s not the case Walmart sees, McMillon said, explaining: “Everyone is price sensitive. We’ve been through a period of inflation that’s changed now — we’re starting to see some deflation, which we’re happy to see — but as price sensitivity has gone up, everyone has been looking for value.”

According to the latest data According to the US Bureau of Labor Statistics, the prices of some food items have already begun to decline. October data showed that the prices of dairy products and non-alcoholic beverages, for example, fell while the price of gas also fell by 4.9%. Overall, this means that the change in the CPI from September to October was exactly zero.

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Amazon echoes Walmart’s remarks

Walmart isn’t alone in its observations: Amazon CEO Andy Jassy said his team saw similar trends from the top of the Internet tree, and seemed confident that consumers would continue to turn to them for basics.

“Consumers are still spending,” Jassy said in an interview. CNBC this week. “They care about what they spend on, and look for bargains and bargains wherever they can. Wherever they can lower prices they try to do so.”

Although some CPI categories fell, inflation remains above the Fed’s 2% target. It was 3.2% in October. However, Jassy said, consumers are still resilient.

In fact, it would take a significant rally to prevent them from buying essentials: “I think people will buy certain retail items,” he noted. “A lot of things are going to go wrong before people stop investing in detergents, shampoos and soaps. If you look at our consumables business, the growth rate is absolutely phenomenal.

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