When you walk into Walmart, there are a few things you can feel confident about.
First, you’re likely to find a pretty impressive array of products, whether it’s potatoes, paper plates, or a last-minute toy for a birthday party you’ve forgotten about.
The other thing you can usually count on from Walmart is impressively low prices.
Walmart has structured its business model around affordable products and great deals. When people see the name “Walmart,” they think “value.” And that has been a winning formula for the big box giant for many years.
But catering to budget-conscious consumers may not be cutting it for Walmart anymore.
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Consumers are cutting back on spending quite a lot these days to keep up with higher costs.
In November, the Consumer Price Index increased by 2.7%. But this comes after many months of non-stop increases.
In early December, Mark Zandi, chief economist for Moody’s, told Fortune that many Americans “are already living on the financial edge.” As such, there is a limit on how much money can be spent on items that are not absolute necessities.
Because lower-income consumers are being forced to cut back on discretionary purchases, Walmart has been forced to start focusing on a different type of customer. And her efforts seem to be paying off. But this is not necessarily a good thing.
Affluent customers are increasingly shopping at lower price retailers like Walmart.Shutterstock” loading=”eager” height=”540″ width=”960″ class=”yf-lglytj loader”/>
Affluent customers are increasingly shopping at lower price retailers like Walmart.Shutterstock
Walmart is clearly tired of being seen as a budget retailer. And recently, focusing on higher-income buyers has been a big part of its success.
Walmart’s most recent quarter beat analysts’ expectations. Sales rose 5.9% overall, and adjusted operating income grew even faster at 8%, the company reported.
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But Walmart also attributes much of that growth to higher-income shoppers.
“As pocketbooks have been stretched, you’re seeing more consumer dollars going to necessities versus discretionary items,” said John David Rainey, CFO of Walmart US, during the company’s latest earnings call.
“We’ve done a great job of improving our assortment,” Rainey said, to cater to more affluent customers.
Rainey also doubled down on that strategy during Morgan Stanley’s Global Consumer and Retail Conference in December, pointing out that one of the recent items that outsold Walmart was AirPods.
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Rainey called the product something “you don’t think of as something you buy at Walmart” and pointed out that it is “more attractive to the more affluent customer.”
He also said, “I think it’s indicative of how Walmart is changing and how our customer base is changing. And we continue to grow and gain share with this higher-income demographic.”
At a time when consumers are nervous about spending money, it’s clear that Walmart needs to pivot.
In November, consumer confidence hit its lowest point since April, according to a recent Conference Board survey. 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 its typical shopper to buy those bigger ticket items, it will have to introduce pricier products and hope that affluent consumers will come in and buy them. But if Walmart strays too far from the low prices it’s known for, it could leave lower-income consumers with one less place to shop.
“It worries me when I hear that affluent customers are shopping at lower-priced retailers like Walmart and TJX because it’s a sign that things are getting expensive around,” shopping expert Trae Bodge told NBC News.
What’s concerning is that it’s not just Walmart that’s trying to attract 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 assortment of products. The company has seen an increase in consumers making more than $100,000 a year shopping at its stores.
Dollar General, too, has seen growth among higher-income shoppers.
But experts like Bodge say an increase in more affluent consumers buying from budget retailers is a red flag. “Obviously, if you’re richer, you can afford to buy the things you need,” Bodge told NBC News.
“But if you’re looking for lower prices, then where does the lower-priced consumer go?”
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This story was originally published by TheStreet on December 20, 2025, where it first appeared in the Retail section. Add TheStreet as a Preferred Source by clicking here.
