Walmart’s McMillon Says Consumers Are Prioritizing Value Purchases

Walmart CEO Doug McMillon reportedly said Thursday (Feb. 27) that the retailer is seeing signs of stress among consumers due to food prices remaining high.

Speaking at the Economic Club of Chicago, McMillon said Walmart sees budget-conscious customers buying smaller pack sizes, being more selective and prioritizing value purchases, Bloomberg reported Friday (Feb. 28).

“There are lots of income levels in this country — if you’re at the lower end of that scale, you are feeling more frustration and pain because of higher food prices,” McMillon said, per the report. “They’ve persisted for years now, and you’re just tired of it. And you want it to get better.”

Walmart and Amazon were cautious in their first-quarter 2025 outlooks during their respective earnings calls earlier this month, reflecting concerns about inflation and slowing consumer spending, PYMNTS reported Thursday (Feb. 27).

The retail giants attributed the weak guidance to factors like inflation, weak consumer demand and foreign exchange challenges. Other impacting factors include tariffs and the shift in consumer focus toward essentials, which are contributing to softer demand for discretionary items.

During Walmart’s Feb. 20 earnings call, Chief Financial Officer John David Rainey said: “The lower-income consumer is still very stretched.”

The retailer’s data showed persistent increases in general merchandise, even as grocery prices remain elevated. And while health/wellness sales surged and eCommerce jumped 20%, discretionary categories like electronics and home goods saw only modest gains.

Target CEO Brian Cornell said in November that shoppers are more cautious with their spending. Speaking during the retailer’s Nov. 20 earnings call, Cornell said: “Consumers tell us their budgets are being stretched. They’re becoming resourceful, focusing on deals, then stocking up when they find them.”

Sixty-five percent of consumers reported living paycheck to paycheck in the fourth quarter of 2024, indicating ongoing financial strain, according to the PYMNTS Intelligence report, “Struggling Consumers Go to Short-Term Strategies to Manage Higher Expenses.”

The report found that the financial pressures of costly bills led struggling consumers to take actions to manage their expenses, with 33% skipping or partially paying bills, 24% applying for financial assistance programs, 22% canceling services and 12% negotiating rates.