Walmart (WMT) released its second-quarter results, beating revenue and earnings estimates. The retail giant also raised its full-year revenue and earnings forecast after noting strong consumer sentiment. With many consumers feeling the pressure of inflation and some retailers and financial analysts claiming there is a more sophisticated consumer, it begs the question as to why Walmart has seen such success compared to some other retailers.

Sucharita Kodali, retail analyst at Forrester Research, joins Wealth! to share insights into the power of the consumer and its future importance to the broader market.

“I don’t think I’m as optimistic about the future of the retail economy and consumer attitudes as the market might suggest. And the reason for that is I look at how growth is relative to inflation, and what we’ve seen over the last few months, and definitely the latest retail data from the U.S. Census Bureau, suggests the same thing,” Kodali says, “which is that consumer spending is essentially in line with inflation rates and even below them in some categories. So that means that while the numbers may be positive, consumers are really, really slowing down.”

She elaborates further, claiming that Walmart’s numbers are due to lower-income consumers taking on more debt:

“They are the ones who are the most burdened and they are probably the ones responsible for some of these strong Walmart numbers because even though Walmart is growing, many other retailers are not. So I would argue that Walmart’s growth is probably coming at the expense of other retailers where consumers may have spent money during the pandemic.”

Watch the full interview with Walmart CFO John David Rainey from Thursday morning.

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This article was written by Nicolas Jacobino