Walmart continues to rollback prices despite rising inflation to boost market share

By Elizabeth Crawford

- Last updated on GMT

Source: Walmart
Source: Walmart

Related tags Walmart Inflation Food price inflation Supply chain

Walmart continues to rollback prices on select categories, including dry grocery, despite rising inflation and other retailers’ decisions to pass higher costs – at least in part – through to consumers.

By going against the grain, the retailer has held price gaps in its target range, benefiting both the consumer who is feeling increasingly pinched by higher prices elsewhere and its competitive positioning, executives told investors during the company’s fourth quarter earnings call Feb. 17.

As a result, the company saw full year revenue increase 2.4% to $572.8b, comp sales in the US rise 6.4% for the year and market share gains in grocery in the US.

“When it comes to pricing, we really take a long-term view of this. And we manage pricing for both customers and shareholders. We’re constantly monitoring our share, our price gaps to competitors, and we’ll continue to do that as we move forward,”​ John Furner, president and CEO of Walmart US, said during the call.

He added that while he is “proud” of his managers’ efforts so far and their ability to maintain the same level of rollbacks in the fourth quarter as at the end of the first quarter last year to benefit shoppers, he added “we’re also seeing the opportunity to increase some of our rollbacks in stores.”

He explained that rollbacks have always been important at Walmart, but are increasingly pivotal as prices increase across the economy.

“On the rollback, this is all about making sure the customers see value. … We’ll continue to be an everyday low price retailer. That’s our platform. We want to offer great values with price gaps to deliver for our shareholders as well each and every day that we operate,”​ Furner said, adding, “We’ll make sure that customers see value in key categories as we get into this year.”

'The amount of communication between us and suppliers is ... particularly high right now'

To deliver this promise to consumers, CEO Doug McMillon said Walmart is drawing on its “longstanding supplier relationships and the way we work with them to try and help them get through the situation as well.”

He added, “the amount of communication between us and suppliers is always high. It’s particularly high right now.”

Furner also noted that Walmart’s merchants have “many levers between mix in categories, what they feature on the home page”​ as rollback that they can easily change as necessary to ensure the company delivers value without unduly squeezing any individual supplier or category.

Consumers remain strong

The company’s ongoing emphasis on rollbacks is a reflection of its values, rather than a shift in consumer attitudes as inflation continues to rise, executives explained during the call.

“At this point, we see really strong demand and the customer who’s in good shape with a strong balance sheet,”​ despite a drop off in government stimulus and rising prices across the board, Furner said. He explained that because Walmart serves customers across income groups and across the nation, it is able to judge their collective temperament and has yet to see drastic shifts into savings-mode as during pervious economically challenging periods.

“We see really strong demand. Private brand penetration is about flat,”​ he added. However, he noted, when consumers become more price-sensitive, in general, it benefits Walmart.

This demand from customers gives the company confidence it will continue to see high inventory pull-through, he added.

As for supply chain management, Furner said, “there were some significant improvements in flow through at ports, changing lead times, getting containers moved into the country and that’s all helped.”

But, he also noted, about two-thirds of Walmart’s goods are made or assembled in the US, which helps alleviate pressures related to import delays.

Based on the quarter and full-year results as well as improvements in supply chain, Walmart expects a strong upcoming year with consolidated net sales predicted to increase about 3% in constant currency, comp sales to grow 3% and consolidated operating income to increase about 3%. Together this should pave the way for an increase of mid-single-digits for earnings per share.

Related news

Show more

Follow us


View more