by Does this strategy offer a template for better goods in the furniture segment?
In one of my recent columns, I looked at the trend of American consumers opting to curtail spending on nonessentials as well as across-the-board down-trending when they are spending.
A recent McKinsey & Co. study showed that a whopping 40% of US consumers have reduced spending in general, and they expect to continue to cut back on nonessentials specifically. This reality reflects profound discomfort about the state of the economy.
With overall consumer spending declining across the board, even among shoppers with higher incomes, the study indicated that the consumer’s intent to buy discretionary products still lags significantly.
Another recent article from the AP concluded that consumers, weary of prices that continue to hover almost 20% higher than they were before the pandemic, are pushing back, in part, by shifting away from name brand to store-brand goods, shifting to discount retailers or simply buying fewer items.
I think the most recent announcement to support this trend came in the form of Walmart’s most recent financial reporting.
Reporting for Q1 of fiscal 2025, the behemoth announced revenue of $161.51 billion, significantly beating the $159.58 billion expected.
In his comments to Yahoo Finance, Walmart’s CEO John David Rainey attributed the increases to the fact that customers are still shopping hard for value. “We see that wallets are still stretched, and customers are still looking for value,” he said.
Some observers credit some of the retailer’s recent growth to a combination of its ability to secure end-column pricing, a huge footprint and $9 billion store makeovers.
But as they say on these infomercials … ”But wait … there’s more.” In this case, the more has lots to do with Walmart’s recently introduced like of private-label goods being called bettergoods.
While the initial rollout of “bettergoods” focuses on food, the intent is likely to soon carry over to nonfood items.
Walmart describes bettergoods as, “A new elevated experience that delivers quality, unique, chef-inspired food at an incredible value. Bettergoods marks Walmart’s largest private brand food launch in 20 years and the fastest food private brand Walmart has brought to market, highlighting the speed with which Walmart can bring trend and innovation to market at scale.
“Today’s customers expect more from the private brands they purchase — they want affordable, quality products to elevate their overall food experience. The launch of bettergoods delivers on that customer need in a meaningful way,” said Scott Morris, senior vice president of private brands, food and consumables at Walmart. “Bettergoods is more than just a new private brand. It’s a commitment to our customers that they can enjoy unique culinary flavors at the incredible value Walmart delivers.”
Simply put, Walmart is already catering to the trading-down consumer by offering products that attempt to embrace every aspect of better goods without the corresponding higher price tag.
Only time will tell if Walmart will strike gold with bettergoods.
But in the meantime, what can our sector do to bump up sales dollars from shoppers seemingly intent on trading down?
