Most consumers in America have noticed that the price for regular items has increased across the board. Everything from gas to insurance, groceries, and clothing has become massively overpriced in recent years.
Due to this phenomenon, more and more customers have been turning away from typical stores and to whoever offers the best price. This is why Walmart outperformed financially in 2024. Now, they want to cater to the needs of their new customers by ditching McDonald’s and joining forces with a new eatery.
Walmart Has Been Performing Well
Due to the massive increase in costs for everyday items, more consumers have been turning to value brands in the past few years. This is why mega retailer Walmart has performed better than its counterparts like Target.
The retailer noted its Q1 2024 earnings in May and a stronger-than-expected performance across most of its major categories. One of the most successful campaigns remains the price-rollback program.
Execs Are Happy With the Results
On an earnings call this month, Chief Executive Doug McMillion said, “Our results were stronger than we anticipated, with sales growth of 5.7% and adjusted operating profit up 12.9% in constant currency. All three operating segments performed well.”
The major retailer has noted that they continue to try to bring down the price of foods to pre-inflation-surge levels. The efforts are now paying off.
Inflation Is Hitting Hard
A recent report noted that more than 65% of Americans have suffered from financial stress due to inflation in the last year.
Regular bills have become massively inflated even though paychecks across the country have remained stagnant. The federal minimum wage still sits at a mere $7.25 per hour, which is not enough to rent a one-bedroom apartment in any state while working full-time.
Listening to Customers Pays Off
The company regularly takes feedback from loyal customers and makes an effort to keep in touch with regular, everyday people who shop at its stores.
Walmart frequently touts its efforts to revamp the shopping experience and make it more pleasant for everyone. “Our store remodels look good and are performing well. Plus, our curbside pickup and delivery capabilities are improving, as indicated by our customer experience metrics,” McMillon told analysts on the Q1 call.
Investing To Make Stores Better
The company also mentioned that they have recently pledged to invest roughly $9 billion to make its brick-and-mortar stores even cleaner, more manageable, and feel refreshed.
The cosmetic overhaul could take multiple years to complete and is expected to affect at least 1,400 locations.
What Are the Updates?
Some of the biggest changes will include updated interiors and exteriors, new paint, signs, shopping carriages, more specious navigatable aisles, new check out designs, bigger pharmacies, refreshed vision centers, interactive corner displays for home designs and bedding, more portions for pick-up and delivery options, as well as grab & go section with fresh meals and drinks.
However, one of the biggest changes is the alteration in foods offered in Walmart. They might be starting to stray away from unhealthy, ultra-processed foods.
New Food Offerings
The ambitious changes to the shopping experience will also include a big update to the food offerings.
Walmart has had a close relationship with McDonald’s for decades. As well, certain locations have other fast-food options like Subway and Taco Bell.
Fewer McDonald’s to be Found
A few weeks ago, McDonald’s units were in more than 800 Walmart stores. Now, there will only be about 150 units left after multiple locations close.
Subways stores are also closing their stores in Walmarts across the United States. However, the super grocery stores are partnering up with a new fast food chain.
Walmart and McDonald’s Break Up
For decades Walmart and McDonald’s had a deep association that just made sense. Walmart offers its customers familiar products at strong-value prices, while McDonald’s promotes values that have long attracted customers.
The two companies work together, but the relationship has soured over time.
The Death of Walmart’s McDonald’s Relationship
There are several reasons why these fast food chains are closing in the grocery store. Less foot traffic in stores, curbside pickup, and hundreds of Walmart’s closing due to loss of sales are why many locations are closing down.
Now, Walmart is trying to entice customers to buy food that is easy to munch on while walking around the store. Think Starbucks and Target.
Getting a Good Deal
As customers scoff at the high prices of fast food restaurants, like McDonald’s and its $15 Big Mac meals, they are turning to grocery stores like Walmart, despite the higher grocery bill, because they feel like they are getting a good deal.
“We aren’t experiencing a weaker consumer overall,” Walmart CEO Doug McMillon said on a call with analysts. “Customers from all income levels are looking for value and we have it.”
Refreshed Dining Options
On Tuesday, Walmart announced that they would be partnering with Knuckies Hoagies, a Milton, Ga., chain that specializes in fresh sandwiches and cheesesteaks.
The opportunity could also involve opening an Alumni Cookie Dough spot in each location with the sandwich shop.
Testing Out Some Brands
Some of the brands that Walmart is testing out are smoothie vending machines, Charley Phyllis Steak restaurants, Domino Pizza locations, Ben’s soft pretzels, and many other fast food concepts.
Another company will likely operate the food locations while Walmart continues its own operations.
Rebranding as Something Healthier
The super grocery store is now trying to rebrand itself through a partnership with a fast food company that makes a lifestyle statement.
Walmart is turning to healthier brands that also lean into traditional fast food. The blend helps with the company’s rebranding and desire to appeal to its current customer base.
Another Popular Chain Now in Walmarts
Uncle Sharkii’s will start appearing in Walmarts in California. Other states will start seeing different fast food offerings in their local grocery stores.
Knuckies, which was founded in 2019, is currently located in 14 shops in Walmart across six states, including Georgia, South Carolina, North Carolina, Tennessee, Oklahoma, and Texas.
Knuckies Hoagies
The sandwich company was founded in 2019 and has garnered massive success.
In 2023, Knuckies was placed on one of the QSR’s 40/40 list, meaning that it was one of the most popular restaurants in the U.S. with less than 40 locations. This big boost in stores means that it will expand throughout the US.
Other Food Partnerships
Aside from the exciting new partnership with Knuckies Hoagies, Walmart has made it part of its mission to expand further into different food offerings than the most unhealthy options.
The company has expanded food shops in hundreds of other stores in 2024 alone. Earlier this year, it announced a partnership with Mr. Gatti’s Pizza across 90 stores.
Enjoy Some Poke
One of the other brands Walmart is partnering with is Uncle Sharkii, which sells affordable Poke Bowls. “Uncle Sharkii is partnering up with Walmart, and we’re getting ready to bring poke to the masses!#Uncle Sharkii #PokeBar #Walmart #ComingSoon,” the retailer’s new partner shared on X, the former Twitter.
Uncle Sharkii has expanded quickly with hundreds of locations in California, Hawaii, Texas, and Utah. The company also plans to expand to Arizona and Nevada.
Companies Are Listening
Amid the massive downturn of retail sales, large retailers have had no choice but start to listen to customers who don’t want to be price gouged for sales anymore.
It appears that only companies that are offering value deals, discounts, and pre-pandemic pricing are thriving right now.
Expanding Programs Has Done Harm
Both Walmart and Target have expanded their curbside-pickup programs, which have enabled customers to order online and pick up at the store without leaving their cars.
While this is a massive convenience for shoppers, this system has cut down on impulse buys like food items from in-store restaurants.
Addressing the Matter
Chief Financial Officer John David Rainey addressed the matter during the chain’s third-quarter-earnings call.
“Omni services, including pickup and store-fulfilled delivery, continue to drive strong growth, leading to a 24% increase in Walmart U.S. e-commerce sales and 16% growth at Sam’s Club,” he said.
Taking Advantage of Services
Walmart also wants customers to take advantage of all their services because it encourages more visits. The company hopes that this level of satisfaction will bring customers back.
“Multichannel shoppers are more valuable, engaging more often and spending more with us,” he added. “Pickup and delivery for Walmart US has been a key source of growth and share gains among upper-income households and has become the most productive channel for acquiring Walmart+ members.”
Affordability Matters
Walmart has long been the pillar of affordable shopping across the US. The company is not only the largest retailer, it is a gauge of consumer sentiment as many people go to the store as their one-stop shop.
From food to home appliances to toys and auto-needs, Walmart’s offerings are often the best choice for consumers on a budget.
