In some ways, Walmart’s upcoming second-quarter earnings report is like waiting for a slow-moving hurricane to make landfall, with the main question not whether there will be damage, but rather how much. it will be serious.
While a lot has changed in the three months since the country’s largest brick-and-mortar retail operator last released first-quarter results that largely focused on changing shopping habits. buying from increasingly cash-strapped consumers, his cautious comments and downgrading of the outlook at the end of July prepared a storm. observers to squat.
“Rising levels of food and fuel inflation are affecting how customers spend, and while we’ve made good progress eliminating hardline categories, apparel at Walmart US requires more markdown dollars,” Walmart CEO Doug McMillon said at the time, noting the likelihood of additional pressures in the second half.
To say the market took notice would be an understatement, as Walmart shares are down 10% in the past three months, compared to a 6% gain for the S&P 500 and a 25% lead for rival Amazon.
What has yet to be reflected and digested is how the 25% drop in the average price of a gallon of gas since the peak in mid-June has impacted minds and spending. of the 150 million consumers who enter its 4,700 US stores each week.
That fact alone makes Walmart’s Tuesday, Aug. 16 earnings conference call the equivalent of “Must See TV” and the critical insights this economic barometer will provide on the state of the consumer and the broader economy.
Other clues
As the business world awaits these results, there are further clues as to how the retail giant and its e-commerce rival Amazon are faring in this climate thanks to a pair of PYMNTS reports analyzing the relative strengths and weaknesses of the two titans.
Prior to its July 25 earnings warning, the “Walmart + Weekend” event and rival Amazon Prime Day had already taken place, giving industry watchers another chance to contrast and compare each other’s customer habits. player.
With about 51 million members, Walmart+ membership is about a quarter the size of Amazon Prime membership of over 200 million members, and while there is a lot of overlap in the habits of purchase within the two groups, key differences remain.
Overall, Prime Day 2022 outperformed the first-ever Walmart + Weekend event. According to the new PYMNTS report “Prime Day 2022: Inflation Hits, But Amazon Still Wins,” 56% of Prime members made purchases during the July sale event compared to Walmart, which saw 24% fewer members Walmart+ is participating this year in relation to its 2021 Deal Days Summer Sale.
Get the report: Prime Day 2022: Inflation hits, but Amazon still wins
To rally consumers and eliminate excess inventory, Walmart held its inaugural Walmart + Weekend sale in June – a campaign to beat Amazon Prime Day in July – and in the report “Walmart + Weekend: Prime Day Rival Or Trip To The Grocery Store “The big clue is in the headline, as Walmart Weekend attendees stocked up on groceries and essentials.
“Walmart’s function as an online grocery store was further highlighted during Walmart+ Weekend,” the study says, as 57% of Walmart+ subscribers who shopped at the event flagship bought groceries, compared to just 24% of Prime members who did so during Prime Day 2021.”
Two Paycheck-to-Paycheck Life Approaches
Our Prime Day 2022 summary found that “only 23% of Prime Day shoppers bought groceries — about half the 45% rate of their Walmart + Weekend counterparts. Conversely, electronics shoppers were more likely to do so on Prime Day (31%) than Walmart+ Weekend (24%). »
Get the report: Walmart+ Weekend: Main rival or trip to the grocery store?
The spending behavior of consumers living paycheck to paycheck on a continuum from struggling to pay bills to not struggling is a telling comparison between the two.
Our Walmart+ Weekend report notes that “Among respondents who subscribed to both Amazon Prime and Walmart+, those most cash-strapped preferred Walmart+ Weekend 2022 over Prime Day 2021. Just under half of subscribers living paycheck to paycheck who also have difficulty paying bills said Walmart + Weekend 2022 had better deals, compared to just 29% for Prime Day 2021.”
Meanwhile, the Prime Day report found that Prime members living paycheck to paycheck and struggling to make ends meet increased Prime Day spending as median revenue increased by $48 year-over-year, but with more deal-seeking this year as “Prime members who live paycheck to paycheck and face difficulty paying their bills have increased spending medians of 28%, from $174 in 2021 to $222 in 2022, as inflation likely caused them to advance their expenses to secure their savings.
Despite Amazon’s better results, our Prime Day analysis notes that “the share of consumers shopping at least once a week from Amazon and Walmart fell 3.8% and 3.2%, respectively. This includes Prime and Walmart+ members as well as non-members.
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NEW PYMNTS SURVEY FINDS 3 IN 4 CONSUMERS HAVING HIGH DEMAND FOR SUPER APPS
About: Results from PYMNTS’ new study, “The Super App Shift: How Consumers Want To Save, Shop And Spend In The Connected Economy,” a collaboration with PayPal, analyzed responses from 9,904 consumers in Australia, Germany, UK and USA. and showed strong demand for one super multi-functional app rather than using dozens of individual apps.
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