Walmart Connect has helped Walmart maintain margins and offset the cost of keeping prices low as consumers seek value on groceries and essentials, the report said.
While same-store sales growth in the United States slowed to 4.1% in the quarter ending April 30, Walmart Connect jumped 44% in the same period. It was the fastest pace since Walmart began reporting the figure in 2023, according to the report.
Walmart Connect has benefited from growth in the company’s membership program, which provides the customer data that drives its advertising platform, the report said. The retail media business uses customer data to help brands target shoppers on Walmart’s website, app and stores, while showing whether ads lead to purchases.
Analysts expect that Walmart will report a similar growth rate for Walmart Connect when it reports quarterly earnings this week, while same-store sales growth is forecast to dip below 4% for the first time in more than two years, according to the report.
Although Walmart Connect accounts for a fraction of Walmart’s $713 billion in yearly sales, its margins contribute a third of operating income, and analysts estimate around 70% gross margins for the business, the report said.
Amazon’s ad business is still larger, per the report, although Walmart Connect is gaining share, with impressions increasing 17% in the second quarter, compared with 9% for Amazon.
Earnings reports this week from Walmart and other retailers are expected to provide insight into consumer finances. Data from PYMNTS Intelligence showed why “value will dominate every call,” PYMNTS reported Monday (Aug. 17).
In July, two-thirds of consumers lived paycheck to paycheck, while 26% struggled to pay their bills. About 80% of households blamed necessities for pressure on their summer budgets, while 58% said they expect to keep paying off summer costs after the season ends.
The July PYMNTS Consumer Expectations Index climbed to 55.6, but confidence in job security dropped five points from June, and government data indicated that concern is growing.
This week’s earnings will likely show fewer large commitments, heavier use of promotions and continued spending at retailers that make a strained paycheck go further, PYMNTS reported Monday.
