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Business owners don't necessarily have to cut costs to combat inflation--they might just need to target a different tax bracket.
While some big-name retailers like Target have rolled out new channels to appeal to cost-conscious consumers, in an attempt to capture shoppers weighted by inflationary pressures, others have taken a different approach by targeting wealthier customers.
Take Walmart, for instance. Last week, the Bentonville, Arkansas-based corporation shared plans to revamp upward of 800 store locations with the goal of attracting wealthier shoppers, Bloomberg reported. As a part of those plans, Walmart stores will get upscale renovations, trendier clothing, more specialty food options, and brighter lighting throughout.
During Walmart's fourth-quarter earnings call, CFO John David Rainey said the company gained share in "virtually every category," but the biggest contributors were households making $100,000 and more a year. That suggests other businesses could benefit from wealthier shoppers looking for a better bang for their buck, too.
Dollar Tree, for instance, has also seen an uptick in wealthy consumers visiting its stores and is increasing its price cap from $5 to $7 for its products as a result, according to its fourth-quarter earnings call.
"The fastest-growing demographic is north of $125,000 a year in income," Dollar Tree executives said on its fourth-quarter earnings call in March. Despite planning to close nearly 1,000 store Family Dollar locations, which Dollar Tree owns, executives said that high-income customers have become more frequent at both Dollar General and Dollar Tree locations since mid-2022.
This trend of wealthy shoppers inside discount stores could be good news for business owners as a whole. Multiple entrepreneurs have previously told Inc.com that shifting their business focus to more premium customers proved to be a smart move for profits. Promoting premium goods is one thing Jocelyn Ho, founder of the Detroit-based houseplant shop Rare Plant Fairy took into consideration last year: "In times of recession, luxury brands still sell," she said.
Source: Inc.