Deep Dive on Walmart’s Relationship with Gen Z during the Pandemic


Walmart’s Q1 earnings report showed stronger than anticipated sales increases for the mega retailer in the last quarter, tripling estimates compiled by Bloomberg. The increased spend changed the overall outlook for Walmart on the year, which was already one of the biggest retailers, alongside Amazon, that actually benefited from the pandemic as sales shifted online.

The stronger than anticipated growth in sales this particular quarter, however, was clearly driven by pent-up demand after more than a year of pandemic-related lockdowns. Chief Executive Officer Doug McMillon all but confirmed this in a statement on the day of the earnings.

“In the U.S., customers clearly want to get out and shop,” he noted.

In the wake of these results, we thought it would be interesting to take a bigger step back and look at Walmart over the course of the pandemic. Specifically, we did a deep dive to see if there’s anything notable about their success during the last 15 months (beyond conventional wisdom, that is confirmed with data that online spend buoyed most of the growth), and what that might tell us moving forward as in-store retail becomes a bigger part of the overall mix of consumer behavior.

Will gains with Gen Z stick?

For this analysis, we looked at the five major demographic groups (Silent, Baby Boomer, Gen X, Millennial, Gen Z/iGen). As you will see, the demographic that jumped out to us was Gen Z, which tracked higher in spending gains than the other generations across the board.

What stood out to us was the fact that Walmart saw consistently higher year-on-year spending increases for Gen Z customers compared to other generations.

The spending gains for the Gen Z segment seen in the Walmart data is similar to spending gains we are seeing within other merchants and industry categories as a whole for that generational segment. The younger generations are spending more and bolstering the economy. One possible explanation for this is because Gen Z consumers have a higher proportion of discretionary spending and were more sensitive to stimulus payments.

Intrigued, we decided to dive a bit deeper. At times, somewhat predictably, the share of online spend versus in-store widened in favor of online through most of the last 15 months, although recently that gap has been all but closed.

Gen Z online vs in-store spending changes

The ease of the online shopping experience at Walmart must have become attractive to Gen Z in particular during the pandemic, but as the U.S. has begun to loosen COVID restrictions, it appears they may return to shopping in stores, rather than ordering online.

Walmart’s pursuit of Gen Z customers, particularly those that shop online, is well known, highlighted recently by its partnership with TikTok to bring livestream shopping to the platform’s users. This was the first initiative of its kind for TikTok, and the fact that Walmart was first in line speaks volumes about their intentions to stay in front of this growing consumer base.

It remains to be seen, however, whether Gen Z will continue to seek out Walmart as a preferred retailer, and how sticky that relationship will be in the future, especially as the economy continues to improve. However, from what we’ve seen, Walmart made quite an impression with this demographic during the pandemic. Looking ahead, it appears Gen Z will remain a key group of consumers for the mega retailer to keep up the momentum in the quarters to come.

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Posted on

June 2, 2021

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