Walmart is targeting higher income and younger consumers with an array of tools, among them remodeled stores that will provide a better shopping experience and help the company leverage price, membership and convenience to draw a broader range of customers.
Remodels are a way Walmart is reconstituting the company’s store fleet in the United States to enhance its omnichannel functionality. In the company’s fourth-quarter conference call, CEO Doug McMillon said Walmart remodels today are designed to provide a true omnichannel experience across salesfloor, pickup and delivery, adding that the early response to the company’s recent remodels was “promising.”
Changes at the store level designed to boost the in-store experience but also the capability for conveniences services including pickup and delivery are part of a larger effort to make Walmart operations more attractive to affluent consumers, particularly at a time when inflation has encouraged them to shop at the company’s namesake and Sam’s Club stores more often. McMillon noted that the company had experienced significant gains in shopping from high-income consumers in the fourth quarter. The game plan goes beyond simply physical changes, though. Walmart also is placing a greater emphasis on memberships as a shopping enhancement and a means to building relationships.
“When we think about our business today compared to what it was during prior economic downturns,” McMillon said, “we now have a more compelling offer, a true omnichannel experience that makes us optimistic that more higher-income families will continue shopping with us across categories because we have pickup, delivery and membership.”
In the latest completed fiscal year, Walmart Membership and Other Income grew to $5.41 billion from $5 billion year over year.
Kathryn McLay, Sam’s Club president and CEO, said in the conference call that the conveniences the banner has added, including curbside pickup and Scan & Go checkout bypass, have resulted in a younger member base than it had been the case before. She also pointed out that Sam’s Club membership is at record levels.
“If I look at the actual membership composition, we’re growing with mid to high household income groups with a share of wallet,” she said. “We’re growing with Millennials and Gen Z as the largest growth area in our membership base.”
Convenience is a significant purchase factor across demographics and particularly with Millennials. In a study by market researcher Numerator, 82% of shoppers said convenience is extremely or very important to them, and the number rises to 87% for Millennials, while it is at 77% for Boomers and older consumers. With changes it has made to give consumers shopping options, McMillon said that Walmart is scoring higher on convenience in customer feedback, with membership customers, particularly enthusiastic.
Given the times and the opportunity, Walmart will promote pickup, delivery and membership to win over additional customers and hold onto them as inflation eventually subsides.
Even as many consumers who are spending more time at Walmart and Sam’s Club today are shopping inflation-pressured food and consumables, the retailer has been reemphasizing home and apparel in its operations to encourage consumers to broaden shopping experiences focused on food and consumables, and generate better margin sales.
The Chesapeake store redesign includes a new feature specifically added to address the special needs of the community. The store has been closed and underwent significant design changes after a mass-shooting event in November last year. The remodel features an outdoor memorial space to honor the victims and provide a place of comfort for the survivors.