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Walmart is ‘positioned to win’ in the holiday shopping season: Analyst

Retailers are gearing up for the impending holiday shopping season, and according to one analyst, Walmart (WMT) is the one most likely to dominate.

The company "has a lot of tools at its disposal to gain more wallets here, like Walmart Plus can be aggressive on price," UBS US Hardline & Broadline and Food Retail Analyst Michael Lasser told Yahoo Finance Live (video above). "It's got a lot of inventory. And so, I think Walmart is positioned to win over the holiday season."

The current inflationary environment in the U.S., which saw the Consumer Price Index (CPI) for August hit 8.3%, has led to shoppers pulling back on spending in many categories. As a result, even the more affluent customers have turned to stores that offer lower prices.

"I think Walmart believes it has the right to win more wallet share with those consumers," Lasser said, adding that "the implication of a recession for a retailer like Walmart is that it's going to benefit. There's no better way for a consumer to stretch a dollar through lower prices than going to Walmart."

Why a tough environment is 'good for Walmart'

The company announced in September it plans to hire an additional 40,000 employees for the holidays despite current margin pressures.

It's significantly lower than the 150,000 employees that were hired last year for the holidays, but Lasser said it's still a "prudent" strategy on Walmart's end.

Consumer appetite for holiday spending has seemingly increased, according to a consumer spending survey conducted by Stifel, while net discretionary spending intentions ticked up by 10% in mid-September.

"There's a lot of uncertainty with the consumer," Lasser said. "Also, keep in mind a lot of the sales gains that have been driven throughout retail and Walmart have been due to inflation rather than transactions. So when you're seeing increases in the amount spent per transaction or amount spent per consumer, you don't need as much labor to process those transactions."

A Walmart worker organizes products for Christmas season at a Walmart store in Teterboro, New Jersey,  REUTERS/Eduardo Munoz
A Walmart worker organizes products for Christmas season at a Walmart store in Teterboro, New Jersey, REUTERS/Eduardo Munoz

On top of that, Lasser noted, the company has invested more in its technology to increase efficiency for its existing workers. These courses of action allow the company to be more aggressive in other areas of the business during the holiday shopping season.

As competitors like Bed Bath & Beyond (BBBY) falter, Walmart can capitalize on those struggles by gaining market share.

"In a more challenging overall retail landscape, it's likely there's going to be more consolidation," Lasser said. "The marginal retailers are going to maybe have a difficult time surviving. That would leave more share for Walmart to gain. And in any of those scenarios, a tough environment is good for Walmart."

Ethan is a writer for Yahoo Finance.

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