Walmart prices are rising at a brisk pace in 2023. While consumers are seeing the cost of everyday essentials go through the roof, the company’s executives say that food inflation is likely to persist for much longer than expected, At the same time, the retail giant’s profits are reaching new records But the vast majority of Americans haven’t seen their incomes rising accordingly, and that’s especially true for middle-income households.
Right now, middle-class workers are coping with the highest cost of living in decades, and many of them can no longer afford to shop at Walmart and are flocking to discount stores instead. In fact, the chain’s CEO Doug McMillion revealed that 75% of Walmart’s new customers are upper-income Americans, who make over $100,000 a year. That indicates there’s something extremely wrong with the American middle class right now.
This group is known worldwide for its purchasing power and economic strength, and for years, it actively contributed to the growth of the megaretailer. The most notable revelation comes from a new study that exposes Walmart has everything to do with the decline of the US middle class.
Despite reporting a 7.33% profit growth. the world’s biggest retailer is warning about weaker sales volume for the rest of 2023 and shared a gloomy forecast last month, noting that abnormally high food inflation is likely to drive away low and middle-income shoppers from its stores. According to an analysis by GOBankingRates, over the past 12 months, grocery prices have risen at Walmart stores by an average of 27.2%. The biggest increases happened in the meat category, followed by produce, and dry goods.
During the past three quarters, most of Walmart’s growth in the grocery segment was fueled by customers with annual household incomes higher than $100,000 the company’s chief financial officer John David Rainey told CNBC.
Meanwhile, inflation has prompted middle-class shoppers to rethink their consumption strategies. Over the past couple of years, many Americans started to feel substantially poorer whenever they shop for groceries or hit the gas pump. Data released by the Pew Research Center shows that 71% of middle-class workers say their incomes aren’t keeping up with the rising cost of living, and now these consumers are currently looking for value to save money.
The Wall Street Journal reported that average spending on grocery products at discount chains increased 71% from Oct. 2022 to June 2023. The survey also revealed that dollar store sales went up by 14% in the past quarter.
The truth is that this company we’ve grown to love has done a lot to destroy the American middle class. “Walmart’s history is the story of what has gone wrong in the American economy. Wages have stagnated. The middle class has shrunk. The ranks of the working poor have swelled. Whatever we may have saved shopping at Walmart, we’ve more than paid for it in diminished opportunities and declining income,” Mitchell stresses.
At this point, it’s clear that this group is losing access to the empire they helped to create. In many ways, Walmart’s ascension led to the collapse of the US middle class, and as the retailer attracts shoppers with a lot more money to spend, they no longer seem to care about the needs of everyday Americans, who are still the backbone of our entire economy.
Article and video cross-posted from Epic Economist.