Wal-Mart Stores Has Its Eyes On High-End Consumers (WMT)

Walmart (NYSE: WMT) is increasingly targeting customers with high incomes in online sales just like Amazon has been doing. This includes making a play for members of Sam’s Club. While releasing the earnings report for the third quarter, the chief executive officer of the retail giant, Doug McMillon, said that members of Sam’s Club were usually people whose families were large, possessed a high income and were probably residing in the suburbs. Additionally this demographic was composed of home-owners not renters. They were also owners of a motor vehicle or two.

“By narrowing the focus on this member, we believe we can earn a greater share of their wallet. We’re already making good progress in areas where we want to win, including fresh food and with our Member’s Mark private brand,” said McMillon.

Premium fashion brands

Besides acquisitions such as ModCloth, Bonobos and Jet.com, Walmart recently unveiled an e-commerce partnership with Lord & Taylor which will see premium fashion brands made available on the website of Walmart (NYSE: WMT).

According to data obtained from Sargent, about 36% of consumers in the United States earn over $75,000 per year. About 30% of those who shop at Walmart (but not Sam’s Club or Jet.com) are in that income threshold. At Sam’s Club on the other hand, 42% of the customers have reached that income threshold while at Jet.com it is 41% of the customers. This is similar to Amazon’s customers. The numbers are however significantly higher at Target as it is 56% of the customers. At Target the figure is 44%.

Third quarter results

In its latest earnings report which were released last week, Walmart’s online sales grew by 50% in the quarter which ended on October 31. This follows several acquisitions including Parcel, a courier service based in New York and the beefing up of its website which now lists more than 70 million items which is triple what was available just 12 months ago.

Other initiatives that Walmart (NYSE: WMT) has introduced to boost online sales includes rolling out curbside pickups to more locations as well as a returns process that is speedier and more convenient. The retail giant has also introduced a service where its employees deliver purchases made online on their way home.

Retail sales in the United States are expected to be even more robust in the next couple of weeks due to the busy holiday shopping season. This year approximately $680 billion is expected to be spent by Americans according to National Retail Federation, an industry group. This is an increase of between 3.6% and 4%.

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