Inflation has crimped household budgets over the past few years, causing shoppers to be more price-sensitive.
So far, that’s been a tailwind for big-box retailers like Walmart, who have been able to win away market share because their massive buying power helps them keep prices low.
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The company has also benefited from relatively low unemployment and wages growing faster than inflation over the past year, which has helped keep customers spending.
Unfortunately, some discouraging warning signs are flashing that could make it more difficult for retailers like Walmart this year.
Walmart has captured a growing share of the retail market
There’s a good chance that there’s a Walmart near you. The company operates over 5,200 stores nationwide, including Sam’s Club, and 44% of Americans shop at one of its stores every year.
Roughly 255 million people shop at a Walmart (WMT) worldwide in any given week, according to Capital One. That unsurprisingly makes Walmart the biggest retailer on the planet. It generated $648 billion in sales during fiscal 2024 and $681 billion in fiscal 2025, up 5.1% year over year.
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In short, Walmart is a Goliath, commanding about 8.6% of the total retail market share, based on Capital One’s data.
The company’s sales growth has come partly from expanding into e-commerce to challenge Amazon. Walmart’s e-commerce market share is forecast to eclipse 10% this year, up from 4.4% in 2017, according to Digital Commerce 360.
It’s also benefited from ongoing dominance in the grocery market, where it commands nearly 37% market share, and increased visits from households earning over $100,000 annually as they’ve become more cost-conscious.
Economic data boosts recession risk
Walmart’s ability to maintain lower prices thanks to its buying power will likely give it an edge against smaller rivals. Still, there are signs that the economy could be slowing, making it more difficult for all retailers, including Walmart, to grow their businesses this year.
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One warning signal is consumer confidence, which has fallen recently.
The Conference Board recently released its February Consumer Confidence survey, and the results weren’t great.
“At the headline level, the reading for consumer confidence dropped to 98.3 in February from 104.1 for January and well below the more than 102 that economists were looking for,” said Guilfoyle in a post on TheStreet Pro.
The Conference Board’s data “was the steepest one-month drop for this series since August of 2021, “said Guilfoyle.
The University of Michigan’s Consumer Sentiment Survey results weren’t any better. In fact, Guilfoyle described them as “awful.”
“There’s no way to make last week’s Consumer Sentiment survey and this week’s Consumer Confidence survey smell sweet,” said Guilfoyle. “If these results are accurate, and they very well may be as they agree with one another (Often these two surveys do not agree), the US consumer is preparing for an outright economic recession.”
Another is the recent uptick in some inflation measures, which has led to the Federal Reserve pausing interest rate cut plans.
The Consumer Price Index showed inflation of 3% in January, up from 2.9% in December and solidly above the 2.4% recorded in September.
The economic data reported so far has led the Atlanta Fed’s GDP tracking tool, GDPNow, which measures total economic activity, to go negative for the first quarter. It currently sits at negative 1.5% — a stark contrast to Q4 GDP growth of 2.3%.
The forecasting tool’s estimate will change as more data is reported. Still, the weakening GDP compared to recent quarters is worrisome. If GDP trends lower, we could experience more job losses and smaller pay increases—neither of which is great news for retailers, including Walmart.
We’re already seeing an uptick in layoffs, particularly in Silicon Valley, where big technology companies that historically pay well have been cutting workforces.
Last week, The Labor Department reported that 242,000 Americans filed for unemployment benefits, up from 220,000 the previous week and higher than the 224,000 four-week average of claims.
Macroeconomic uncertainty isn’t new and isn’t lost on Walmart’s top management.
The company is guiding for net sales growth of approximately 3% to 4% in fiscal 2026.
“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,” said Chief Financial Officer John David Rainey on the company’s fiscal Q4 conference call. “As a result, we’ve taken a similar approach to our initial guidance view for the year as we have in the past couple of years, balancing known risk with what we can control.”
“I think similar to last year, the last couple of years very consistently, we have to acknowledge that we are in an uncertain time. And we don’t want to get out over our skis here. There’s a lot of the year to play out,” added Rainey.
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