Business models come and go. While consumers are still grappling with the after effects of a seemingly endless supply chain crisis, new models are developed. And alongside new models, an entirely new set of customer needs are taking place.
Consumer habits vary based on any number of factors. Trends are never stagnant; and adaptation is the only constant in any business, physical or digital
But some have staying power. EDLP (“Everyday Low Pricing”) is one of them. And if the name of that model seems familiar, you can thank Walmart.
Walmart: A Retail Lion or a Digital Ant?
Walmart's strength as a physical retailer isn't based on its product range alone, but by its sheer visibility.
There's over 5,300 Walmart stores across the US, over 3,500 of which are Walmart Supercenters. Approximately 220 million customers visit Walmart each week, with EDLP prices remaining the predominant driving factor in Walmart's foot traffic.
But foot traffic isn't the same as digital traffic. Walmart may be well established as a physical retailer, but has competitively fared well below the digital market share commanded by Amazon—despite a projected revenue growth of 26.4 percent by the end of 2021.
Walmart may lag behind Amazon in online sales. And as customers continue to adopt digital commerce in leaps and bounds, they've even begun to lose their grip as the largest US retail business in sales volume.
Yet despite their increased competitiveness (including their recent attempt to vie for Amazon's lucrative digital advertising business), Walmart has one advantage rooted in their physical strength: customer loyalty.
Customer Loyalty and Walmart
Walmart customers maintain a fiercely loyal relationship with the company. According to the Q2 2021 Retail Loyalty Report from In Market, Walmart scored 3.22 out of 3.5, making it the US retailer with the highest number of repeat visits.
In comparison, one of Amazon's largest historical strengths is also its weakness in maintaining customer loyalty. Similar to Walmart, it's a one-stop shop for everything under the sun. But that doesn't necessarily mean such an advantage can attract customers quite like Walmart has.
With inflation costs causing more American consumers to spend less for greater value, Walmart's pricing schedule makes them primed to retain customer loyalty in a way that Amazon simply can't.
Which is great news for Walmart—but not so much for third party brands who are struggling to maintain a foothold in the face of competitiveness and decreased spending.
Just Who is Shopping Online at Walmart?
So what does the average online Walmart customer look like?
Not particularly different from their physical counterparts, it seems. A survey from Jungle Scout conducted in 2021 revealed that Walmart.com customers are increasingly price conscious, with 83 percent actively looking for ways to save when shopping compared to 75 percent of all US consumers.
While that same survey found that 54 percent of Walmart customers reported financial setbacks in the past year, the retailer has always used price to position itself; a strategic advantage which consistently allows them to maintain customer loyalty even in spite of increasingly lower prices from competitors.
Brand preferences may be one thing. But obtaining the best deals is a consumer preference that never goes out of fashion.
Walmart's Customer Demographic Shift
There's been a recent change in Walmart's customer demographics. A 2016 survey from Kantar Retail revealed that Walmart shoppers tend to skew towards women between the ages of 45-54 with an annual household income between $50,000 - $75,000.
But today's online Walmart shoppers can't be so easily defined. They're as likely to be male as they are female; and in 2020, neither age nor disposable income were dominant factors in the face of sheer necessity.
As the pandemic forced even digital-hesitant shoppers to adopt new habits, competitive price advantage became critical. Millennials may have historically been the least likely to show retailer loyalty, but their younger Gen Z siblings have indicated pricing to be their primary online shopping benefit.
Interestingly enough, 84 percent of Walmart.com shoppers also begin their product searches on Amazon compared to 74 percent of US consumers, while 60 percent also shop on Amazon at least once a week.
Walmart and Amazon: Strength in Diversity
It's becoming clear that channel diversity is no longer a question of competition in the digital marketplace but an outright necessity. But it's also just as applicable to the option between physical and digital shopping.
A 2020 survey from Google found that 73 percent of consumers consider themselves “channel agnostics” when choosing between in-store and online shopping. That's a number Walmart has leveraged to their advantage by offering delivery methods including curbside pickup and BOPIS services
At the same time, online purchase decisions aren't necessarily centralized around expanded delivery options. The choice between purchasing in store and online isn't just a question of convenience. It's a question of immediate need; and despite the shipping advantage that Amazon Prime offers, there's just as much immediate need for smaller third party businesses to sell in store as there is online.
But not every brand will benefit from developing an omnichannel strategy. There's both pros and cons to selling on Walmart Marketplace which need to be carefully weighed before considering channel exclusivity. Walmart's online expansion today could easily be a handicap for businesses establishing limited relationships with any channel—brick and mortar as well as digital.
But just what does the average online Walmart customer look like in 2022? They might just look like your average customer.
As diverse and unpredictable as your business
Are your customers reaching out to you in all channels?
We're just as dedicated to your success on Walmart as we are on Amazon. Find out more at Color More Lines.