Light Wave


Amazon, Walmart unsure what to expect from inflation-weary customers

By Jake Beardslee · December 7, 2023

In brief…

  • Walmart execs caught off-guard by "puzzling" October consumer spending shifts
  • Company shares dropped 7% in November on revised holiday shopping forecasts
  • Walmart and Amazon say all income levels displaying heightened price sensitivity
  • Shoppers expected to remain resilient on staple purchases like detergent
  • Retailers still banking on solid 2023 sales despite inflation wariness
Major retailers express confusion over erratic consumer spending trends in the inflationary economy, worried frugal shoppers will curtail typically busy holiday seasons.  Walmart Corporate from Bentonville, USA/Wikimedia

Consumer spending patterns have corporate leaders scratching their heads, unsure if the inflation-wary public will continue opening their wallets into 2024. While Bank of America’s Brian Moynihan asserts shoppers remain “very, very strong,” Walmart CFO John David Rainey said October brought “puzzling” trends, according to Fortune.

According to Rainey’s comments Wednesday at the Morgan Stanley Global Consumer and Retail Conference, spending during the last two weeks of October was “anomalous” versus prior months. He was quick to add he did not aim to be “alarmist,” but Walmart shares sank 7% this month on the shifting outlook.

When Q3 earnings were announced in November, Rainey first referenced the changes, saying “We see our customers showing ongoing discretion in seeking value to manage within their household budget.” This week he reiterated that while price-consciousness and deflationary pressures haven’t altered Walmart’s long-term plans, bosses were caught off-guard.

Walmart CEO Doug McMillon expanded on the situation in a CNBC interview the same day. “Customers generally speaking are really sensitive right now,” he said, noting they’re “prioritizing their orders” in anticipation of possible post-Christmas clearance sales.

McMillon countered previous assumptions inflation impacts lower-income consumers most severely. “Everybody’s price sensitive,” he contended. With inflation above the Fed’s 2% target, “as that price sensitivity went up, everybody was looking for value.”

Amazon CEO Andy Jassy seconded the analysis, stating shoppers “are being careful about what they spend on” while pursuing bargains. Still, he believes consumers will continue buying essentials, saying detergent and similar items would require an extreme economic decline before shoppers pull back.