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COVID-19

Walmart was prepared for how customers are shopping in the pandemic

Sabri Ben-Achour Aug 18, 2020
Heard on: Marketplace
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People walk past a Walmart in Washington, D.C. The company's sales surged in the second quarter. Andrew Caballero-Reynolds/AFP via Getty Images
COVID-19

Walmart was prepared for how customers are shopping in the pandemic

Sabri Ben-Achour Aug 18, 2020
People walk past a Walmart in Washington, D.C. The company's sales surged in the second quarter. Andrew Caballero-Reynolds/AFP via Getty Images
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Walmart reported earnings Tuesday, and the retailer is killing it. E-commerce sales are up 97%, and same-store sales are up 9.3% in the second quarter. It looks as if Walmart is doing something right in this pandemic economy.

If retail in America is a giant consumerism pie, then Walmart’s slice is getting bigger.

“Walmart is gaining share in pretty much every category,” said Charlie O’Shea, senior retail analyst at Moody’s.

Part of Walmart’s success has to do with what it is selling: essential goods that people still buy during a pandemic, like groceries. Walmart’s food operation is huge at $184 billion in sales last year, nearly one and a half times Kroger’s sales.   

“Anywhere between 55% and 60% of Walmart’s business would normally be consumables,” O’Shea said.

The other key to Walmart’s success — probably the bigger key — is the many way in which Walmart sells. It provides online ordering, delivery, pick up at the curb and in-store shopping. 

“They made a full-court press on e-commerce very successfully,” said Sayan Chatterjee, a professor at the Weatherhead School of Management at Case Western Reserve University.

However customers want to hand over their money, Walmart was ready even before the pandemic. Finally, Walmart has something else to thank for its success, according to Andrew Lipsman, principal analyst at eMarketer. That would be the government.

“Government stimulus checks and unemployment assistance — those dollars are probably more likely to get spent at Walmart than at any place else,” Lipsman said.

Lipsman added Walmart’s success is emblematic of a bigger trend in the pandemic. It’s the biggest stores that have been able to lean into the moment and adapt. Smaller and medium-size businesses are buckling.

COVID-19 Economy FAQs

What does the unemployment picture look like?

It depends on where you live. The national unemployment rate has fallen from nearly 15% in April down to 8.4% percent last month. That number, however, masks some big differences in how states are recovering from the huge job losses resulting from the pandemic. Nevada, Hawaii, California and New York have unemployment rates ranging from 11% to more than 13%. Unemployment rates in Idaho, Nebraska, South Dakota and Vermont have now fallen below 5%.

Will it work to fine people who refuse to wear a mask?

Travelers in the New York City transit system are subject to $50 fines for not wearing masks. It’s one of many jurisdictions imposing financial penalties: It’s $220 in Singapore, $130 in the United Kingdom and a whopping $400 in Glendale, California. And losses loom larger than gains, behavioral scientists say. So that principle suggests that for policymakers trying to nudge people’s public behavior, it may be better to take away than to give.

How are restaurants recovering?

Nearly 100,000 restaurants are closed either permanently or for the long term — nearly 1 in 6, according to a new survey by the National Restaurant Association. Almost 4.5 million jobs still haven’t come back. Some restaurants have been able to get by on innovation, focusing on delivery, selling meal or cocktail kits, dining outside — though that option that will disappear in northern states as temperatures fall. But however you slice it, one analyst said, the United States will end the year with fewer restaurants than it began with. And it’s the larger chains that are more likely to survive.

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