The chief executive officer of Walmart Inc. said American consumers are showing signs of stress as food prices remain stubbornly high.
Some shoppers are running out of money before the end of the month and turning to smaller pack sizes for consumer goods, Chief Executive Officer Doug McMillon told about 1,000 executives at the Economic Club of Chicago on Thursday evening. While prices for products such as apparel are now near pre-pandemic levels, food prices are still elevated.
Walmart is seeing “stress behaviors” among budget-conscious consumers, “and we worry about that,” McMillon said. “You can see that the money runs out before the month is gone, you can see that people are buying smaller pack sizes at the end of the month.”
He also noted that overall consumer behavior has remained consistent over the past year or so. Shoppers are being more selective and prioritizing value purchases.
Higher prices for everything from beef and eggs to fuel present a challenge for retailers including Walmart, which has become one of the world’s largest companies by offering “everyday low prices.” The company recently projected lower-than-expected profit for the current fiscal year while citing uncertainty related to consumer behavior as well as economic and geopolitical conditions.
Walmart’s CEO said concerns about safety, taxes and the cost of property were among the factors that led the company to close half of its stores in Chicago. The locations, which were already losing money, were severely damaged during unrest in 2020, McMillon said.
“That was another moment in time — ‘do we reopen them, or, given that they lose money, do we just use this opportunity to say we just decided not to reopen?’ he said. “It was a real debate inside the company, but a few of us, including me, wanted to try again.”
