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Tired of Cutbacks, Shoppers Demand Affordable Luxuries From Mass-Market Retailers

Walmart, retail, shopping

After years of being conservative in their spending in response to ongoing economic challenges, shoppers are looking for ways that they can feel more indulgent without breaking the bank, demanding that retailers offer more premium — but accessible — options.

Here is where collaborations come in. Walmart announced Tuesday (April 16) a partnership with celebrity-helmed apparel line The Jessica Simpson on a clothing collection more affordable than the latter’s typical fare. While dresses from Jessica Simpson’s line might typically sell for high double-digit or low triple-digit prices, “most items” in the Walmart collection sell for under $30.

“I am so excited to partner with Walmart to bring our collection to a whole new group of dynamic and beautiful customers,” Jessica Simpson said in a statement, adding that the retailer is “an incredible one-stop shop.”

The move comes as consumers are forced to make difficult budgeting decisions. The February/March PYMNTS Intelligence study “New Reality Check: The Paycheck-to-Paycheck Report: Why One-Third of High Earners Live Paycheck to Paycheck” found that 60% of shoppers have cut down on nonessential retail purchases.

Additionally, the report, which drew from a survey of more than 4,000 U.S. consumers, revealed that half have turned to cheaper retail merchants due to product price increases. Forty-five percent of low-income shoppers (those who make less than $50,000 annually) and 41% of middle-income ($50,000 to $100,000) shoppers said they had traded down on quality in the previous year.

Yet consumers still want to be able to treat themselves. “The Nonessential Spending Deep Dive Edition” of the series of reports revealed that 70% of retail shoppers buy “nice-to-have” items at least sometimes, and clothing items are the most common splurge.

Walmart is looking to meet the demand for indulgence with its Walmarche strategy, promising upscale products without the upscale price tags.

“Walmarche could end up making Walmart more attractive for the lower- to middle-income consumers there already, especially since Walmart is subsidizing how much consumers pay to buy those fancy brands right now,” PYMNTS’ Karen Webster observed. “Maybe Walmarche ends up making more of the shoppers they have today more loyal.”

In fact, PYMNTS Intelligence research found that roughly a third of Walmart customers make less than $50,000 annually, another third are in the $50,000-$100,000 bracket and the final third make more than that.

Walmart is not the only mass-market retailer taking such an approach. Target has been partnering with high-end designers for decades, going all the way back to 1999, most recently teaming with Diane von Furstenberg.

For Walmart, in addition to providing the former two groups with more affordable access to premium items, the Walmarche strategy may also enable the retailer to reach higher-income consumers with more cash to burn, if those shoppers know that they are going to get a premium product at a more affordable price than usual.

“Having a shopper base that is less financially pinched is important as Walmart finds its share of overall retail spend declining against its biggest rival, Amazon,” Webster wrote. “Walmart must first convince high earners that they’ll find recognizable designer brands or really high-quality dupes at cheaper prices than they’d find elsewhere, and then make shopping at Walmart a habit.”