The past year has been something of a roller coaster for the consumer goods and retail industry.
2024 was marked by considerable consolidation, with niche and specialty retailers slowly slipping away and being replaced by corporate giants.
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Many large and once-reputable restaurants and retailers, including Big Lots, The Body Shop and Red Lobster, filed for bankruptcy. Some of these filings are due to misguided management or a loss in interest. But increasingly, retailers are going bankrupt because they just don’t offer enough.
What was once the gold standard for a successful retail business plan — having a large footprint and a large selection — has now been replaced by something of a race to the bottom. Now, the name of the game is to have a large online presence (which tends to be far less costly) and sell as many goods as cheaply as possible.
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While consumers still value quality, often, what motivates a purchase more than anything is price and convenience. If you can get an item somewhere for $3 cheaper and it arrives on your doorstep by tomorrow, that’s an awfully hard proposition to beat.
Walmart food and grocery section, which offers value to many cost-conscious customers.
Walmart
Consumers are more price-conscious
That’s partly because the American consumer is increasingly sensitive to rising costs.
The regular monthly Consumer Price Index (CPI) rose 0.3% overall in November. Here’s a look at key price movements across some of our most crucial products and services:
Food at home: increase 0.4%Food away from home: increase 0.5%Energy: increase 0.2%New cars: increase 0.6%Used cars: increase 2.0%Apparel: increase 0.2%Medical care services: increase 0.4%Shelter: increase 0.3%
“Four of the six major grocery store food group indexes increased in November,” the U.S. Bureau of Labor Statistics found.
“The index for meats, poultry, fish, and eggs rose 1.7% over the month, as the index for beef increased 3.1% and the index for eggs rose 8.2%. The nonalcoholic beverages index increased 1.5% in November, after rising 0.4% in October.”
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Thanks to a still-strained supply chain, the rise of bird flu, and uncertainty about a changing U.S. presidential administration, prices are anything but steady and predictable right now.
Walmart CEO attends high-profile meeting
Walmart CEO Doug McMillon is increasingly aware of this price sensitivity and has made it his mission to offer customers budget-friendly items.
Earlier in 2024, Walmart announced it would roll back the price of many of its items, including groceries, to pre-inflation levels.
And in early January, the executive made a trip to Mar-a-Lago, Donald Trump’s Palm Beach, Fla.-based resort, to discuss a host of political and socioeconomic issues that may affect Walmart customers. Reports suggest the two discussed tariffs, something Trump has been outspokenly in favor of in recent years.
Trump has proposed a universal 10% to 20% tariff on all goods imported into the U.S., with an additional 60% to 100% tariff on Chinese imports. Many of the goods Walmart imports are from China, which is often how they are procured so cheaply.
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The National Retail Federation (NRF) suggests that such tariffs could increase the consumers between $46 billion and $78 billion in additional spending, something few Americans think they could afford.
Walmart remains mum on what exactly was discussed, though McMillon previously sat as an advisor to Trump during his first presidential term. He was also on Trump’s 2020 special task force to craft a response and economic recovery to the covid pandemic.
“We’re positioned to manage it, but what I worry about is customers experiencing higher prices, and we’re going do everything we can to try and keep them low,” McMillon said in 2017 of Trump’s proposed tariffs.
Now, Walmart is remaining mum on the details of McMillon and Trump’s meeting, only revealing that it was fruitful and that the company is optimistic about the future.
“Doug enjoyed reconnecting with President Trump on a range of topics,” a Walmart spokesperson said, adding that it was a “great conversation.”
“We stand ready to help move our country forward,” the spokesperson added.
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