Walmart's CEO reveals the 3 key phases of shoppers' pandemic spending, from grocery stock-up trips to stimulus-induced splurges on televisions

• Walmart CEO Doug McMillon described three main phases of pandemic spending: the stock-up phase, the "entertaining and education at home" phase, and the stimulus-spending phase.
• Shoppers stocked upon groceries and essentials in the first phase; bought puzzles, bicycles, and home office equipment in the second phase; and in the third phase used stimulus money to buy apparel, television, and toys.
• Walmart also saw huge growth in grocery pickup and delivery, with sales growth surging nearly 300% at peak.

Walmart's sales have surged over the last several months as shoppers stocked up on groceries and other essential items.

The company's US same-store sales grew 10% in the first quarter and US e-commerce sales grew 74%, the company said Tuesday.

A deeper dive into this data reveals key trends that show how the pandemic has changed shopper behavior.

Overall, shoppers made fewer trips to Walmart stores, resulting in a 5.6% decline in the number of transactions during the first quarter. While they shopped less often, customers stocked up and spent more money per trip, driving up the average receipt by 16.5%.

Breaking the sales data down further shows how shoppers changed their behavior as the pandemic progressed.

In a call with analysts on Tuesday, Walmart CEO Doug McMillion described three main phases of spending driven by stock-ups, entertaining and educating at home, and stimulus spending.

The first was the stock-up phase.

"We experienced unprecedented demand in categories like paper goods, surface cleaners, and grocery staples. For many of these items, we were selling in two or three hours, what we normally sell in two or three days."

In February, same-stores sales rose 3.8%. Then the "stock-up" phase hit in mid March, and same-store sales surged more than 15%.

Store sales slowed in the first half of April, then picked back up mid-month as customers spent government stimulus money, resulting in a 9.5% same-stores sales increase for the month.

"As the quarter progressed, we saw a second phase related to entertaining and educating at home," McMillon said. "Puzzles and video games took off. Parents became teachers. Adult bicycles started selling out as parents started to join the kids.

"And overlapping trends then started emerging related to DIY and home-related activities: think games, home office, exercise equipment and the like," he continued. "It was also clear a lot of people were taking a do it yourself approach as they bought items like bandanas and sewing machines to make masks."

Walmart also saw increases in home categories as people invested in home and outdoor improvements, he said.

Then came the third, stimulus-induced phase of spending in which shoppers bought televisions, apparel, and toys.

"Another phase emerged," he said. "Call it relief, because it was heavily influenced by stimulus dollars leading to sales increases in categories such as apparel, television, video games, sporting goods and toys. Discretionary categories really popped towards the end of the quarter."

Walmart's pickup and delivery services are luring new customers

Another key theme from Walmart's first quarter was the strength in online grocery and store pickup and delivery.

The company said pickup and delivery reached all-time high sales volumes, with sales growth surging nearly 300% at peak, and is attracting new customers.

"The number of new customers trying pick-up and delivery has increased 4X since mid March," McMillon said.

McMillon said Walmart further expanded the assortment of goods available through online grocery to include more general merchandise.

As a result, the company is planning to phase out the term "online grocery" to refer to its pickup and delivery services.

"I think it's time we stopped referring to our super center pickup and delivery capability as online grocery because it's becoming much more than grocery," he said.