New research from Brickmeets Click and Mercatus says that affluent households played a significant role in driving Walmart's online grocery growth during the first half of 2024 as even, sorry.

Even as lower income households remain the retailers core e grocery segment.

According to Grocery Dive, the growth stems from Walmart's higher income households spending more online and ordering more frequently than other customer segments.

Walmart's growing popularity with higher income households comes, quote, at at the expense end quote of supermarkets, hard discounters, and target.

Walmart's most affluent customer segment, which makes up more than $200,000 in annual income, now makes up 8% of its average monthly active user base.

That affluent monthly user base has increased five times faster over the past year than its overall average monthly active users have.

The two firms found lower income households, or households that are making less than $50,000 a year, accounted for 41% of Walmart's average active monthly users, compared to 36% for hard discounters, 30% for supermarkets, and 28% for target, per the report.

But while Walmart sales for this customer segment dipped 6%, supermarkets and target saw a drop of 20%.

Joe, this is also our a and M put you on the spot question of the week.

We are going to put you in the hot seat here.

And here is the question that A and M has 1 may have been able to predict this trend, this Walmart affluent customer increase trend per A and M CRG's spring customer sentiment survey, where higher income households maintained a 600 basis point higher preference to shop online in general, plus 24% of higher earners, indicated they've switched to less expensive grocers.

Joe, do you suppose the Walmart versus broader grocery results are indicative of that wallet tightening for more affluent online shoppers or because of a superior Walmart delivery customer experience?

What do you make of these new income statistics surrounding Walmart?

That was a lot.

Welcome to the party, Joe.

There's, there's a lot of stats there to parse out.

I kind of wish there were some, some graphs and charts.

You need some infographics.

Yes, working on it.

You know, my head went first to customer experience as opposed to trading down or, you know, affluent customers suddenly watching their grocery budgets more.

It was, the second thing was the one that I thought of, which is when you decide where you want to buy your groceries online from, if you do it at all.

It depends on selection, it depends on price.

But most importantly, it depends on, like, how fast you get your order and is your order correct and those kinds of things.

And it only takes one or two negative experiences for somebody to sour on kind of whoever they use the first time and try somebody else.

And I kind of think it might be more that experience piece that's driving Walmart's success with affluent customers.

It's probably a little bit of both, but I would I put my money more on the experience they're able to deliver.

Yeah, I think that makes a lot of sense, Joe.

I mean, you look at number one, and that being convenience, and the majority of the households in the country are, you know, Walmart is the closest option for them.

And if they can, you know, order online and have it delivered or they can have something available for pickup on their schedule, I mean, that, that is a huge impact, regardless of demographic, I think.

But I, especially in this case, and what they're seeing with this more affluent customer.

But, Chris, what are your thoughts here?

I think the answer to a and M's question is clearly both things are happening.

You know, you have the higher income shopper trying to be more discerning, but you also have something special in the water at Walmart.

And so I think at the end of the day, this news is massive news.

It really is.

It's a huge headline because the fruits of it are really going to be felt as the economy gets better and the lower income strata starts to reemerge, so to speak, at, you know, and who knows when that is.

But it'll happen at some point.

And so, you know, I, there's two things I would key in on with this announcement.

First, and Joe, you kind of mentioned it, but I'll go into it a little bit further.

Is grocery shopping is a really sticky behavior.

So once you have high income shoppers shopping for groceries at Walmart, it will become an integrated part of their weekly grocery routines.

And the second point I make is that the data also, this was really interesting to me.

The data also shows that only 17% of Walmart's monthly users bought groceries online from another supermarket format in the first quarter of 2024, which was a 28 basis point drop from the same period in 2023, which means Walmart's getting more shoppers and they're cross shopping less.

So that bodes very well for, for Walmart going forward.

It only puts more tailwind at their back if they can continue this, which.

And then they get the lower income strata in the, into the game as well.

So there is growth latent here that's going to come for Walmart at some point in time.

So this is big news to me.

Yeah.

Especially Chris, I think that's a great point.

But especially when you start to bring in like scoop fashion and apparel product and all of the work that they're, Walmart's really, really been digging their heels into in the, the higher end apparel and fashion as they're adding those brands to their marketplace, the stockx partnership.

I mean, I think you're so right.

Like, once you get in there and people are going to Walmart for maybe a pair of sneakers that they wouldn't go to before, and now they can, you know, get Thanksgiving dinner like we talked about last week for under, you know, $10 a person or $7 a person.

I think it was like all of those things are going to just kind of give people a reason to keep being fueled in, in that Walmart experience.

And I think the last thing that I would just add to kind of close us out here, Chris, too, is I think that the digital penetration is really important, especially with this more affluent consumer.

And especially as you're starting to see Walmart steal more share from like a target, for example.

I think Walmart is dominating in their marketing.

They're dominating in, you know, their innovation investments.

They're doing all the things to make this customer experience really good from a digital perspective, from an online perspective.

And so I think that, you know, for me at least, I think Walmart's still lacking in the store experience that will be important to keep and maintain this affluent customer.

So I think I, seeing their investment tier in digital and, you know, in the Walmart that they're kind of putting out into the public is great.

I think they're going to have to, to maintain that affluent customer base.

They're going to have to still make investments in stores if they want to kind of retain that base and continue.

To grow it, which they are doing, too.

Although I push back on that a little bit because I think all this growth is potentially additive.

When you look at the higher income shopper, I think it also plays back the adage we talked about on the show, too, and which what is old is new again.

You know, the supercenter was the key invention in the, in the eighties, basically, and you, and the grocery was the trip driver.

And now we're seeing online at Walmart, that grocery can be the trip driver for the upper income echelon of the digital shopper.

That then, to your point, gets them into peril, gets them into other things, and that end, their marketplace is fully functioning as well.

So that's all additive growth here at the end of the day.

So you think the store experience is a little bit less important.

It's really more about like just keeping them in the digital and marketplace sphere.

I think so, especially when you look at the, the tough times the lower income strategy is having, because that will come back via the store.

But all this growth is additive in the digital sphere, which is so important here, so.