Is Wal-Mart Predicting the End of the US Middle-Class?
Recently, Walmart has been delving into the world of aspirational retail, having had discussions with the cosmetics subscription, Birchbox, about a potential buyout. Whether they knew it or now, it says a lot about the American economy, according to a recent piece by Business Insider. Over the past few months, Walmart has made investments in several trendy online retailers...why? They are hoping to attract a whole new market: rich people.
Well, perhaps not "rich," but more upper-middle-class individuals who shop from trendy places like Birchbox but wouldn't consider shopping at Walmart. This is a pretty tall order though, considering that Walmart has a horrible reputation when it comes to "fashion." Walmart sells very inexpensive, unfashionable garb...so cheap and unfashionable in fact that a 2017 investor presentation by Ascena Retail noted Walmart as being the lowest of the low:
So how can Walmart ever hope to get into a market where their reputation has been cemented as being the absolute worst?
ModCloth's (one of Walmart's recent high-end investments) has dresses that cost anywhere from $60 to $150, whereas Walmart's dresses are usually priced at $10 to $25. Similarly, Birchbox's best-sellers range between $20 and $30, according to the company's website, while most of Walmart's best-selling makeup costs less than $10.
While this may be appealing to some, it confirms that Walmart does not care about losing favor with the middle-class. Pew Research Center defines "middle class" in America as households with two-thirds to double the national median income. While that still includes roughly half of American households, it's a rapidly shrinking group — from 2000 to 2014, middle-class populations decreased in 203 of the 229 metropolitan areas. If there is no middle-class, then Walmart will seek to appeal to those that are growing.
It's an interesting observation, but not a confirmation. Just a trend to look out for in the economy in the coming months and years.