Happy Saturday! Are you all set for Halloween? 👻

Or maybe you have other unique ways of celebrating this time of the year?

Today, we'll discuss how Walmart is beating its competition.

All this, and more, in just 4 minutes to read.

— Weronika

QUOTE OF THE DAY

“Innovation is the ability to see change as an opportunity - not a threat.”

— Steve Jobs

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READER RESPONSE

Last week, we asked readers: What's the one thing you do that helps you stay motivated to chase your goals and avoid stagnation?

Here are a few responses:

• "Write goals each year and check in on them a few times a year.” — Adam, Chicago, IL
  

• "Family. I feel I have an obligation to my family and my extended family to give them every opportunity to be successful. I always think, “If I fail, they fail.” — Greg, Las Vegas, NV
  

• "Meditation, of course!.” — Anne Marie, Philadelphia, PA
  

• “Exercise!” — Michael, Toronto, Canada

Answer this week’s question: How do you celebrate Halloween, and what's your costume choice (if any) this year?

HOW WALMART IS WINNING

Food prices

While U.S. inflation shows signs of moderation, the grocery store remains a source of financial strain for many Americans. Supermarket prices have surged at a pace not seen in decades, making everyday essentials like eggs and bread unaffordable for some.

Prices for food at home rose by 11.4% in 2022, and they’re projected to increase by 5% in 2023. In 2019, this category rose by just 0.7%.

In recent years, egg prices have almost doubled, prompting some consumers to resort to unconventional measures such as attempting to smuggle eggs from Mexico and substituting "Easter potatoes" for dyed eggs to save on household expenses.

Meat, fish, and chicken prices have also increased significantly compared to two years ago. Additionally, cereal and bread now cost nearly 25% more than they did in 2021.

Walmart is proving to be a beneficiary. Many Americans already used Walmart as their go-to option, but grocery-price inflation may drive even more folks to shop there, trying to maximize their grocery budgets.

Walmart for everyone

In 2023, there were 63,237 grocery stores in the U.S. But the largest grocery retailer in the country isn’t just a grocery store, it’s Walmart. The mega-store surpasses its closest competitors, such as Kroger and Costco, in grocery sales by more than double.

With prices rising not only for food but also for items like gas and housing, many households are turning to Walmart for its affordable reputation.

Walmart CEO Doug McMillon recently emphasized a changing trend with inflation's impact. Previously, it primarily affected lower-income households, altering their spending patterns. However, McMillon believes this trend has shifted, with higher-income households showing increased price sensitivity and a growing inclination toward Walmart.

He says Walmart also witnessed an increase in new customers visiting their stores, using their app, and checking out with online shopping services.

To grow its customer base, the superstore has enhanced its online shopping experience by introducing direct-to-fridge delivery programs and extending its late-night delivery services.

In the coming five to ten years, Walmart wants to attract more customers from the middle and upper-middle classes specifically.

Making money

But how did Walmart's grocery division win over millions? Scale clearly plays a major role in its success.

While the supermarket and its competitors have faced criticism for not competing fairly with small, independent grocers, it leverages its substantial resources to secure advantageous pricing arrangements with suppliers.

When comparing a basket of 45 identical items, including milk, a dozen eggs, and a frozen pizza, Amazon Fresh prices were approximately 28% higher than those of Walmart, and Target's prices were around 9% higher than Walmart's.

Another advantage is its massive footprint.

Roughly 95% of Walmart stores in the U.S. are positioned within an average distance of 10 miles from another Walmart store, and approximately 70% of the U.S. population resides within just five miles of a Walmart.

This makes Walmart one of the most conveniently accessible supermarket chains in the country. Not to mention, its proximity allows consumers to cut transportation costs, resulting in savings on gas.

Walmart has also experimented with automating the fulfillment of grocery orders by introducing automation systems at the back of its stores.

The company even acquired Alert Innovation, a company specializing in using robots that resemble larger versions of vending machines that help pick different groceries. This move aims to enhance the efficiency and productivity of Walmart's stores, handling orders quicker than ever.

Walmart has revealed plans to invest approximately $18 billion in capital expenditures and new equipment this year, with a significant portion allocated to automation initiatives.

Consequently, Walmart anticipates that by the end of fiscal year 2026, about 65% of its stores will be serviced by automated systems.

The megastore sees e-commerce as the next accelerator for growth. Walmart believes that by integrating automation into this aspect of its operations and continuously improving the shopping experience to make it cleaner and simpler, it can take its business to new heights.

Will that be enough for it to preserve its title as America’s biggest grocery business?

Dive deeper

Watch this CNBC video to learn more about Walmart’s strategy and business model.

WHAT ELSE WE’RE INTO

📺 WATCH: How banning most Chinese cotton has shifted global supply chains

🎧 LISTEN: Niche down to scale up in property management with Peter Lohmann

📖 READ: Fears of a climate disaster lurk in Big oil's big deals

See you next time!

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