Walmart plans drastic product change as customers switch gears

Walmart (WMT) , the largest retail chain in the U.S., is hopping on a budding consumer trend that has impacted the sales of several large companies.

The move comes during a time when the retail giant is noticing a significant shift in customer behavior.

During the second quarter of this year, Walmart’s U.S. comparable sales increased by 4.6% year over year, according to its latest earnings report. Recent data from Placer.ai also found that foot traffic in Walmart stores spiked by 1% year over year during the quarter.

However, during an earnings call in August, Walmart CEO Doug McMillon said the company has noticed that middle- and lower-income households are switching their shopping habits in stores due to recent economic pressures such as inflation and concerns about tariffs.

“We see more adjustments in middle- and lower-income households than we do with higher-income households,” said McMillon. “In discretionary categories where item prices have gone up, we see a corresponding moderation in units at the item level as customers switch to other items or, in some cases, categories.”

Walmart announces a major change to food products

Amid this shift in shopping behavior, Walmart is making a bold change to its food products to attract more customers into its stores.

The retail chain plans to remove synthetic dyes and an additional 30 ingredients, such as certain preservatives, artificial sweeteners, and fat substitutes, from its private-label food brands in U.S. stores. These brands include Great Value, Marketside, Freshness Guaranteed, and bettergoods, according to a recent press release.

“Our customers have told us that they want products made with simpler, more familiar ingredients — and we’ve listened,” said Walmart U.S. CEO John Furner in the press release. “By eliminating synthetic dyes and other ingredients, we’re reinforcing our promise to deliver affordable food that families can feel good about.”

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Walmart recently surveyed its customers and found that 54% review food ingredients and 62% want more transparency regarding the ingredients in food products.

The retail chain claims that roughly 90% of its private brand food products in the U.S. don’t contain synthetic dyes.

Walmart said it is working with suppliers to adjust formulas and source alternative ingredients for these products. Customers will see the reformulated products rolling out in U.S. stores over the coming months. The company expects to complete this change by January 2027.

Walmart’s Sam’s Club announced a similar change to its Member’s Mark food products in 2022. 

In July, the warehouse club revealed that it has banned 40 ingredients consumers deem harmful from 96% of its Member’s Mark food and beverage products, and it plans to remove them from all products in this category by the end of the year.

Walmart’s latest move follows a growing consumer trend

Many consumers nationwide have become more health-conscious when it comes to the food and beverages they consume, a trend that gained steam amid the Covid pandemic in 2020.

A survey conducted by the International Food Information Council last year found that 79% of Americans consider whether a food product is processed prior to purchasing it. Also, 63% of Americans avoid processed foods, while more than half follow a vegan, vegetarian, or plant-based diet to be healthier.

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Food ingredients such as seed oils, including canola, sunflower and palm, have recently faced criticism from consumers for being overly processed and contributing to inflammation in the human body.

Synthetic dyes such as Red 40, Blue 1, and Yellow 6, which are commonly found in processed foods, have also raised concerns for being linked to health issues such as cancer and hyperactivity in children, despite being approved by the U.S. Food and Drug Administration.

Food companies such as PepsiCo, Kellogg, and Kraft Heinz have recently flagged that their customers are leaning more toward healthier food options, which is impacting sales. This contributed to their decision to cut certain ingredients from their products.

“We’re seeing more conversation in social media about health and wellness, in general, and obviously, that’s impacting consumption of food and consumption of beverages,” said PepsiCo CEO Ramon Laguarta during an earnings call in February.

U.S. secretary of Health and Human Services Robert F. Kennedy Jr. has even planned to remove synthetic dyes in food and beverages across the country, which has also prompted some food companies to make changes to their ingredients.

“For too long, some food producers have been feeding Americans petroleum-based chemicals without their knowledge or consent,” said Kennedy in an April press release. “These poisonous compounds offer no nutritional benefit and pose real, measurable dangers to our children’s health and development. That era is coming to an end.”

Related: Target stores will soon undergo big changes as shoppers pull back

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