Walmart may be struggling to connect with their customer base according to the Conference Board, who just reported that consumer confidence especially amongst the blue giant’s shoppers has dropped for the fourth straight month. While that would not be great news for any retailer, it is especially problematic for Walmart, whose representatives already warned that 2025 is shaping up to be a rough year, even tougher than previous ones.
One of the main reasons for the dip in confidence is the ongoing financial struggles that U.S. Consumers are feeling due to the squeeze from inflation and bracing themselves for the tariffs announced by President Donald Trump. Since the impact of these new tariffs is still a big unknown, many shoppers do not feel confident in going out and spending in non-essentials, as they may need to conserve money for household staples in the future. After all, the pandemic and its effects on people’s wallets is still recent enough that many are cautious to say the least.
Because of all this, Walmart expects slower sales and profit growth this year and as expected, investors did not take that news well and its stock took a hit, dropping around 6% in early 2025 trading. The bad press even dragged down the Dow Jones, which slipped more than 1%.
The problem is more widespread than just Walmart
Since Walmart is the biggest retailer in the U.S., its struggles are just a prequel to those that will affect others that are even less powerful and have less of a bargaining chip with suppliers. If sales slow down for Walmart, it is likely that other grocery stores and supermarkets across the country will feel the impact too, which makes 2025 a pretty unpredictable year for the retail sector as a whole.
Interestingly, and despite public perception of the company, one of Walmart’s strongest customer bases in recent years has been people earning over $100,000 a year, aka shoppers who are looking to cut costs on groceries. The company has also built a solid online shopping system to compete with Amazon and features like online ordering with in-store pickup and its Walmart+ subscription service, which offers same-day grocery delivery, have helped it stay competitive.
Walmart chief financial officer John David Rainey said during Thursday’s earnings call. “Our outlook assumes a relatively stable macroeconomic environment, but acknowledges that there are still uncertainties related to consumer behavior and global economic and geopolitical conditions.”
This means that, while they are gearing up for the unpredictable future of the economy, being the biggest player in retail has its advantages, and Walmart might actually be in a better position than smaller stores when it comes to handling new tariffs. Because it has strong relationships with low-cost suppliers, it may be able to keep prices lower than its competitors, which will give them an edge when push comes to shove. Smaller businesses, on the other hand, might struggle to keep up and could be forced to raise prices just to stay afloat alienating even more their customer base.
Still, consumers are nervous; as the economy keeps shifting, and everyday costs are not getting any cheaper. In January alone, consumer prices rose 0.5% compared to December, and essentials like food and energy continue to get more expensive.
To add to the uncertainty, Walmart has announced store closures across the U.S., citing falling sales and rising operational costs. Some of the locations set to close include stores in Columbus, Ohio; Milwaukee, Wisconsin; and Towson, Maryland. Several stores in California, in particular in San Diego, El Cajon, West Covina, Fremont, and Granite Bay are also on the list making customers even more weary of the sustainability of the company.