NEW YORK — Food and groceries remain top of mind for US consumers when it comes to spending their inflation-tinged dollars, said John Furner, president and chief executive officer of Walmart US, at the Oppenheimer Consumer Growth & E-commerce Conference.

Following the post-pandemic inflation wave, customers have favored nondiscretionary over discretionary purchases, and increased food and consumables sales have siphoned dollars from Walmart’s general merchandise business, Furner explained in a question-and-answer session with Oppenheimer & Co. analyst Rupesh Parikh at the virtual event on June 11.

“What we’ve really noticed starting in early 2022 was some conscious switching amongst products, and you can see that pronounced suddenly in the store,” Furner said. “But based on what people are having delivered, our flexibility, convenience and other things that we have improved over the last few years have made a difference in our ability to serve more of our existing customers more often with more units and then meet some new customers as well, which is great. As far as the mix inside the business when it comes to merchandise, over the last five years — really four-and-a-half to five years — we’ve seen about a 2% shift from discretionary to nondiscretionary. In other words, 2% more of our business is food and consumables than what it was before this period began.”

But change may be in the wind among consumers, Furner noted. For the fiscal 2025 first quarter ended April 26, Walmart reported that US net sales rose 4.6% year over year to $108.7 billion, and comparable sales excluding fuel increased 3.8%, with e-commerce contributing 280 basis points to comp results. The average shopper ticket amount was flat despite 3.8% growth in transactions. Operating income climbed 9.6% on an adjusted basis.

“We’re seeing consistency amongst consumer groups over the last several quarters,” Furner said. “Some of the factors that are weighing in are strong employment — another 272,000 jobs created reported last week (by the US Bureau of Labor Statistics). Wages have grown pretty significantly in a lot of sectors over the last few years, and wages at Walmart amongst our associate group have grown about 30% over the last five years.”

Despite shoppers’ efforts to temper spending, both the food/consumables and general merchandise segments have grown for Walmart US, Furner pointed out.

“Both businesses are bigger,” he said. “The only real shift we’ve seen in the last couple of quarters, (which) we talked about at the end of Q1 as we got into the month of May, is more strength in apparel and more strength in home. Apparel is coming from both our new remodels, what we call ‘Store of the Future,’ which is great to see the improvement there. And then expansion of assortment and first-party commerce and the Marketplace have both helped our home and apparel businesses.”

Agreeing with Oppenheimer’s Parikh, Furner said the market is “definitely a bit more promotional” versus a year ago as key players have become more aggressive on pricing to draw cost-savvy shoppers. After waiting to be the “last up” to lift prices during the runup in inflation, Walmart US stepped up promotions in 2022 to clear inventory and then stabilized them in 2023, he noted. Now the Bentonville, Ark.-based retail giant is turning up the promotional heat again to keep its pricing edge.

“We wanted to maintain our price gaps, and it feels like we’re in the third phase where there’ll be more unit retail pressure across the market,” Furner explained. “So we’re definitely seeing more promotions. We have over 7,000 Rollbacks in our assortment, which is up about 45% over a year ago. During this third phase, we’re really focused on unit growth. And if we see the opportunity to lower prices, we want to be the first down.

“We’ll manage margins. We’ll invest in prices appropriately. We’ll invest in experience and associates and then manage this within the bottom line. But the 7,000 Rollbacks are a great example of what’s different this year versus last year.”

Walmart customers have embraced the Rollbacks.

“The consumers are very smart,” Furner said. “They recognize its value, and (with) a lot of items where we’ve taken 20% off the retail — or in some cases, less or more — we see up to 40% increases in units. It’s typically immediate items like french bread or some price investments made in produce have done really well. Our private-brand soft drinks we took from $1.42 to $1.”

He added, “There is more participation as of late with both brands and things that we’ve invested in on our own and for our merchants. They can invest in high-margin items and still grow units and mix categories. That’s a lever that the merchants have always had. But we are seeing more participation amongst suppliers as we try to get unit volumes up.”

When asked by Parikh about food-at-home versus food-away-from-home, Furner said Walmart US can cater to both channels as customer preferences and affordability change. But for now, consumers are still leaning toward at-home food consumption to save dollars.

“I think we’re positioned to continue to benefit, should that continue,” he said. “We’re also positioned that if that goes the other way, then we still have a lot of flexibility in channels we can deliver on. And when you look at our baskets by type of channel people shop, we can see differences. About a year ago, we saw units start to accelerate in produce, proteins and the dairy category. And when you dig into what was accelerating, it’s ingredients that would be used to cook at home, which is different than selling frozen food or packaged grocery, which of course we can do and (offer) great quality and value.”