• Walmart is attracting more upper middle-class shoppers due to inflation. 
  • CFO John Rainey touted an influx of customers with household incomes above $100,000.
  • Inflation has prompted many Americans to adjust their spending habits.

Inflation is squeezing American consumers, even the upper middle class. But according to the latest round of retail earnings calls, the ongoing efforts of upper middle-class shoppers to pinch pennies are proving to be a boon to Walmart.

The big-box chain has strived to keep costs down in response to inflation. Walmart has also struggled with overstocked inventory, much like its rival Target. 

But the latest sales data indicates that inflation is driving some upper middle-class consumers to Walmart, which recently saw its sales grow 8%. The company’s chief financial officer, John Rainey, told CNBC that nearly 75% of Walmart’s recent market-share gains came from “customers with annual household incomes of $100,000 or more” who are turning to the big-box stores’ grocery aisles. During the company’s Tuesday earnings call, Walmart announced that it had beat Wall Street estimates

What exactly constitutes the upper middle class can vary throughout the United States, depending on the local cost of living, according to Pew Research. In a 2022 article noting that upper middle-class families are facing unique struggles during the pandemic, the Wall Street Journal, citing Fed data, defined “upper middle class” as earning “between $75,301 and $127,300 a year.” 

‘Walmart’s advantage’

“The middle-class consumer is currently looking for value to save money,” Jharonne Martis, director of consumer research at financial market data firm Refinitiv, told Insider. “They are cutting off their Netflix subscriptions and instead getting a membership at Sam’s Club, Costco or BJ’s to save money at the pump. This is Walmart’s advantage.”

In the latest earnings call, Walmart CEO Doug McMillon announced that the company has “continued to gain share in grocery.”

“Price leadership is especially important right now and one-stop shopping becomes more than just convenience when people are paying over $4 a gallon for fuel,” he said in a call with investors. 

Martis also cited Walmart’s foray into fuel — through the gas pumps available at Sam’s Club locations — as a major advantage. In its latest earnings call, Walmart announced that its revenue at Sam’s Club had jumped 17.5%, trouncing investors’ expectations. 

“At a time when economists are predicting that discretionary spending by consumers is likely to decline, analysts polled by Refinitiv remain more bullish on discounters that sell gasoline versus those that don’t,” Martis said.

The average Walmart shopper is a white suburban woman who earns around $80,000 a year, according to data from analytics firm Numerator, though Walmart’s focus on steep discounts has also attracted lower-income shoppers looking to save money.

One expert cited Walmart’s recent investments in its digital capabilities, in addition to its discounting, as possible lures for more upper middle-class shoppers.

“Walmart’s CEO mentioned this during the company’s latest earnings call, pointing to convenience and digital capabilities as reasons the company is successfully connecting with both middle and high-income shoppers,” Pieter de Villiers, CEO at mobile messaging firm Clickatell, said in a statement to Insider.

Inflation has prompted middle-class shoppers to rethink their consumption strategies. Over the summer, the inflation rate hit 9.1%, a 40-year-high. Since June, prices have begun to cool down somewhat. In July, prices only rose 8.5% year-over-year. Still, ongoing inflation has made many Americans feel substantially poorer whenever they shop for groceries or hit the gas pump

But these high prices aren’t borne equally by everyone. Rising prices have traditionally harmed low-income consumers, while wealthier shoppers have an easier time bearing the costs. That’s no different for the current trend of inflation, which came in the wake of a pandemic that saw thousands of citizens fall below the poverty line. And even financially-secure shoppers may be looking to scale back spending.

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