Walmart recently posted strong fourth-quarter results, even amid inflation, high prices of goods, labor shortages, and global supply chain issues. Walmart also posted a positive outlook for 2022. The first major retailer to post its fourth-quarter data, Walmart seems to have been able to rise above the many issues that other businesses struggled with at the end of 2021. As the company believes it will continue to do well into 2022, this outlook may help analysts also understand companies and consumer behavior a bit better.
According to Walmart executives, they don’t see consumer behavior changing drastically anytime soon. While many issues still exist — such as labor shortages and supply chain issues — that could hinder business activity, Walmart executives don’t believe that consumer demand will completely go away. However, the one main area they’re paying close attention to is inflation and the higher price of goods.
Thus far, consumers haven’t decided to go to the cheaper options available because of these higher prices for a variety of goods. Instead, consumers have seemingly stayed with the brands they’re used to investing in and buying. However, if inflation persists and the price of goods continues to rise higher, then consumers may end up choosing the cheapest option available of the specific product they want, rather than the brand they normally choose. Walmart executives state that they haven’t seen this happen yet, but they are keeping a close eye on this problem.
Walmart executives also, according to this new report, believe that the major supply chain problems that have persisted throughout the pandemic will slowly start to go away in 2022. This would be positive for Walmart and many other businesses who have struggled because of the many different problems that have stemmed from the global supply chain issues.
Walmart also believes that its consumers are still in good financial shape, signaling that they believe consumers will still spend money at the company’s locations. All of this data and forecasting comes amid interesting reports recently done, most notably the decrease in consumer sentiment. While consumer sentiment does normally hint at how consumers will spend money in the future, it’s not always 100% accurate.
For example, the latest report revealed that consumer sentiment had fallen yet again, signaling a downward trend. However, retail sales in 2022 have already increased more than initially suspected, signaling that the current decrease in consumer sentiment hasn’t yet impacted how consumers actually spend their money.
Many economists believed that the first few months of 2022 would experience a slight slowing down of the economy, mainly because consumers may not want to spend so much money after shopping during the holidays. This may end up being true, but thus far consumer demand has not decreased as much as anticipated. Walmart still believes its consumers will shop accordingly.
Even if the economy does slow down in growth a bit in the first few months of 2022, economists aren’t worried. Likely, demand and business activity will speed back up towards the end of spring and the beginning of summer.