“The company has scale, strong relationships with vendors, strong relationships with consumers. That will help them,” said David Silverman, a retail analyst at Fitch Ratings. “That being said, they’re a significant importer.”
Mr. Silverman said shoppers might first see prices rise for discretionary items, like consumer electronics and toys, much of which is sourced from abroad, especially China. But Walmart is also probably assessing consumer behavior and identifying the products that shoppers might shy away from if prices were to rise, which could factor into pricing decisions, he added.
As the entire retail sector continues to face down the economic effects of the Trump administration’s policies, Walmart’s relatively favorable position compared to its competitors “will probably become even more evident as the year unfolds, when the operating environment could become much more challenging,” analysts at UBS said in a research note.
Walmart brings in millions of customers each week, making it a bellwether for U.S. consumer trends. Consumer sentiment has been falling, dampened by concern about tariff-related price increases and the outlook for the job market.
Consumer-facing companies have started to point to a pullback in spending as a result. Walmart, which said on Thursday that it saw sales growth across all income levels in its most recent quarter, has gained market share by attracting more higher-income shoppers in recent years. But its customer base includes a large number of lower-income shoppers, who have less capacity in their budgets to pay the higher prices that the tariffs could bring.
“Walmart is not the lowest cost provider out there,” Mr. Silverman said, adding that the company, over time, could be negatively affected by a pullback among lower-income shoppers. “It has a low price positioning, but it not the lowest.”
