In its quarterly earnings call on Thursday, Walmart announced that the major retailer would be raising prices at its stores due to the high tariffs on imports.
During the call, the Senior Vice President of Walmart, Stephanie Schiller Wissink told investors, “Given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure.”
Starting as soon as late May or early June, prices at Walmart locations nationwide and online are likely to go up – but just how much of a price hike you can expect is still unclear. Here’s what we know so far about the major retailer’s plans.
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Why is Walmart raising prices?
(Image credit: Getty Images)
The recent tariffs that have been rolling out over the last few months have been hitting businesses everywhere. Everything from cars to baby items have been getting more expensive due to tariffs.
However, until now, Walmart has been somewhat shielded from the impact of the trade war because a big chunk of its products are from the United States.
“More than two-thirds of what we sell in the U.S. is made, assembled, or grown here,” Wissink said. But not everything Walmart sells is made here and, in certain cases, there are no U.S. suppliers that could replace Walmart’s overseas suppliers. So some products on store shelves will be more expensive.
The retailer didn’t say exactly how much higher prices would be, but the Senior Vice President repeatedly emphasized that Walmart was in a position to absorb some of the costs in order to keep prices for shoppers as low as possible.
Part of that ability to absorb the cost is due to the success its seen in other areas of its business. During the earnings call on Thursday, the major retailer reported a big uptick in Walmart Plus memberships, noting a nearly 15% increase in membership income over the first quarter.
That and other sources of growth have helped put the company in a position to stave off price increases, as everyday low prices have historically been one of its key draws for consumers.
Walmart raising prices – but not on food
One way Walmart plans to limit the impact of tariff price hikes on its shoppers is by keeping food prices as low as possible. “We won’t let tariff-related cost pressure on some general merchandise items put pressure on food prices,” Wissink said.
While certain imported foods that aren’t typically grown in the United States – like bananas, coffee and avocados – might get more expensive, Walmart plans to keep other food prices as low as possible. Instead, shoppers are most likely to feel the impact when shopping for electronics and toys, which, the retailer noted, are largely imported from China.
This is true across other retailers, too. One of Walmart’s biggest rivals, Amazon briefly considered displaying tariff charges on its product pages last month. Over 70% of products on the online marketplace come from Chinese suppliers, making the ecommerce giant even more vulnerable to tariffs than Walmart.
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