Walmart CEO: Food Prices Are Causing ‘Frustration and Pain’

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The CEO of Walmart Inc. said American consumers are showing signs of stress as food prices remain stubbornly high.

Some shoppers are running out of money before the end of the month and turning to smaller pack sizes for consumer goods, CEO Doug McMillon told about 1,000 executives at the Economic Club of Chicago on Feb. 27. While prices for products like apparel are now near pre-pandemic levels, food prices are still elevated.

Walmart ranks No. 1 on the Transport Topics Top 100 list of the largest private carriers in North America.

Walmart is seeing “stress behaviors” among budget-conscious consumers, “and we worry about that,” McMillon said. “You can see that the money runs out before the month is gone; you can see that people are buying smaller pack sizes at the end of the month.”

He also noted that overall consumer behavior has remained consistent over the past year or so. Shoppers are being more selective and prioritizing value purchases.

A customer walks through a Walmart store in Grand Prairie, Texas. (Shelby Tauber/Bloomberg News)

Higher prices for everything from beef and eggs to fuel present a challenge for retailers including Walmart, which has become one of the world’s largest companies by offering “everyday low prices.” The company recently projected lower-than-expected profit for the current fiscal year while citing uncertainty related to consumer behavior as well as economic and geopolitical conditions.

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Overall U.S. inflation in January jumped by the most since August 2023, driven in part by the cost of eggs. With bird flu killing millions of chickens, egg prices surged more than 15% from a month earlier, the biggest advance since 2015, according to the U.S. Bureau of Labor Statistics.

Egg prices in January were 55% higher than a year earlier, prompting President Donald Trump to label the situation “a disaster.” McMillon said he’s in contact with his staff on the cost of eggs and how the retailer can provide relief to consumers. While prices for nonfood items have declined, food prices haven’t, with higher wages, input costs and other factors contributing, he added.

“There are lots of income levels in this country — if you’re at the lower end of that scale, you are feeling more frustration and pain because of higher food prices,” he said. “They’ve persisted for years now, and you’re just tired of it. And you want it to get better.”

Last year, Dollar General also warned that inflation was having a negative impact on lower-income shoppers, with a growing number unable to make their incomes cover their monthly expenses. Dollar General ranks No. 18 on the private TT100.

Tariffs Risk

The U.S. is forecast to import more food than it exports for a third straight year, with the agriculture trade deficit expected to balloon to a record $49 billion this year, according to the U.S. Department of Agriculture. Before the recent string of trade imbalances, the country since the turn of the century only brought in more food than it shipped out in 2019 and 2020, during Trump’s trade war with China. Trade deficits were also seen for several years before 1960. Walmart has said it’s dealt with tariffs for years and has a diversified supply chain.

Walmart’s CEO said concerns about safety, taxes and the cost of property were among the factors that led the company to close half of its stores in Chicago. The locations, which were already losing money, were severely damaged during unrest in 2020, McMillon said.

“That was another moment in time — ‘Do we reopen them, or, given that they lose money, do we just use this opportunity to say we just decided not to reopen?’” he said. “It was a real debate inside the company, but a few of us, including me, wanted to try again.”

Safety Concerns

Still, the situation worsened after the stores reopened, and Walmart lost even more money in Chicago, he said, with other locations subsidizing the unprofitable ones.

“On top of that, I started to develop concerns about safety and security,” he said.

Walmart has been revamping its operations, including an expansion of its e-commerce operations, to fuel growth and fend off competition. Walmart offers more than 700 million items online and is heading toward an inventory of a billion, McMillon said.

The retailer also is upgrading its network of more than 4,600 U.S. stores to make them more modern and easier to shop in. It’s opening new locations while branching into newer areas like membership and advertising.

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