Walmart US CEO John Furner recently addressed investors about the company’s strategy during inflationary periods. He highlighted the importance of remaining low priced for customers by being the last to increase prices. This approach has been successful for Walmart as it has attracted more customers seeking refuge from high prices elsewhere.
The retail giant is benefiting from a flywheel effect between three major trends. Firstly, inflation has led customers from various income brackets to turn to Walmart for better prices. This trend has translated into lower costs for Walmart, allowing them to offer even lower prices and attract more customers.
Secondly, there is a shift towards online shopping, with more customers choosing to shop online. This enables Walmart to lower e-commerce fulfillment costs, which they can then reinvest into further reducing prices on thousands of items. This efficiency increases customer traffic and sales, creating a cycle of customer attraction that helps the company retain and grow its customer base.
Lastly, Walmart’s ability to lower prices, combined with improvements in their store fleet and merchandise strategy, has created a cycle of customer attraction that is helping the company adapt to meet the changing needs and preferences of its customers during periods of economic uncertainty.
In conclusion, Walmart’s strategy of remaining low priced for customers by being the last to increase prices has proven successful in attracting more customers seeking refuge from high prices elsewhere. The retail giant benefits from a flywheel effect between three major trends: inflation leading to lower costs; online shopping enabling cost savings; and improvements in store fleet and merchandise strategy increasing customer traffic and sales.
This strategy is particularly valuable during periods of economic uncertainty as it allows Walmart to adapt to meet the changing needs and preferences of its customers while maintaining their loyalty through low pricing and efficient operations.
