Walmart’s rise originally came largely in the 1970s through the ’90s when inflation was high. Relentless efficiency—including rewriting the rules of retail marketing by eschewing high-low promotions—let it drive down prices for shoppers acutely aware of the rising costs.

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So, it’s no surprise that CEO Doug McMillon has talked about Walmart being uniquely positioned to thrive as inflation soared anew this year. What is a surprise is just how well Walmart has delivered, by some measures beating a rival many predicted would be its undoing—Amazon. And it’s come amid a gas-price spike worse than those that hit Walmart harder than other retailers in the past.

For the past two quarters, Walmart’s top-line growth has beaten most U.S. competitors—even price-focused ones such as Dollar General and Target. Its e-commerce growth has matched or beaten that of Amazon. And its Walmart Connect media business, up 30% globally and 40% in the U.S. last quarter, is outgrowing Amazon’s too. Walmart’s smaller sibling, Sam’s Club, has been thriving as well, posting 11 consecutive quarters of double-digit comparable store sales growth.

That might seem like a matter of Walmart just getting the basics right on cost and price. But it comes amid relentless marketing and merchandising innovation that’s also helped Walmart win beyond its lower-income, middle-aged base.

‘A spirit of innovation’

“A spirit of innovation and entrepreneurship has been part of Walmart’s DNA since the days of Sam Walton,” said William White, U.S. chief marketing officer of Walmart. “I think our role as marketers is to help build upon the trust that we’ve built up as a retailer and further strengthen that connection by meeting customers where they are. That often happens through innovation.”

So, within the past year, Walmart:

• Became the first retailer to introduce shoppable ads on Roku;

• Launched a partnership to give members of Walmart+ free access to Paramount+ —a value equal to about half the annual membership fee without raising prices like Amazon Prime did this year;

• Opened Walmart Land in the Roblox to market to its next-generation shoppers;

• Built its third-party seller business on Walmart.com by rolling out a self-service ad platform for independent sellers similar to Amazon’s;

• Launched a creator platform pilot aimed at helping even new creators build shoppable content and order fulfillment capabilities;

• Improved return-on-investment tracking for Walmart Connect advertisers, in part through a partnership with Roku, Snap and TikTok;

• Expanded shoppable livestreams across seven platforms and partnered with more than 350 events so far in the fiscal year—a 600% increase from the prior year—working with more than 100 brand ambassadors, brand founders, social creators and suppliers.

Walmart did face some challenges, including dealing with a tragedy the day before Thanksgiving when a mass shooting inside a Virginia store left six people dead, including the suspect, a Walmart store manager. The murders don’t reflect on Walmart’s marketing success, but nonetheless took a toll on the retailer. “We feel tragedies like this personally and deeply. But this one is especially painful as we have learned the gunman was a Walmart associate,” Walmart U.S. CEO John Furner said in a statement. “The entire Walmart family is heartbroken.”

Sam’s stays on a roll

Sam’s Club continued a hot streak amid a transition from Chief Member Officer Tony Rogers to Chief Member and Marketing Officer Ciara Anfield in February. That included breaking out of its usual low-profile marketing to run its first Super Bowl ad from Kevin Hart’s production company and WPP’s VMLY&R.

Sam’s also revamped its own retail media offering, renamed Member Access Platform, bringing in The Trade Desk as a programmatic trading partner, with data support from Liveramp and IRI to help target and measure ad effectiveness, including on Pinterest, outside the retailer’s own properties.

The Super Bowl ad exceeded all expectations, Anfield said. And Sam’s liked it enough to have Hart help produce and star in ads around football tailgating season and its holiday campaign as well.

But the real secret sauce for Sam’s, Anfield said, “has been what we call member obsession.” That means starting each week with the membership team talking about what’s happening with members, how Sam’s is doing on net promoter scores in surveys and what it takes to improve that satisfaction.

Success aside, Sam’s still has launched media and creative agency reviews, Anfield said, because “on our journey to be a best-in-class marketing organization, we think it’s really important to continue to review the business against our evolving needs.”

Beating the fundamentals

What makes Walmart’s recent run more remarkable is that it comes amid higher gas prices that long have been a headwind. Walmart over-indexes in rural and suburban places with less public transportation, where people have to drive miles to stores and higher gas prices take a bigger bite out of their disposable incomes. Historically, that meant a disproportionate sales hit when gas prices spiked. Not only has that not happened this year, but Walmart’s sales have accelerated.

Walmart+, which offers free delivery and discounts on gas purchased at stores, has been a big part of how Walmart bucked its historical trend, White said. Walmart has continuously expanded home delivery (also available for a fee to non-members) to reach 84% of U.S. households.

“High gas prices affect customer behaviors in a number of ways,” White said. “For some, it means stocking up more on fewer trips. For others, it means utilizing Walmart+ membership for free delivery, and I think that’s been a powerful tool. Discounted fuel prices are also meaningful.”

There’s also plenty of room for Walmart’s membership program to grow. Only about 7% of people in the U.S. are in households with Walmart+ membership today, compared to 61% for Amazon Prime, according to CivicScience tracking surveys. But Walmart has been stepping up Walmart+ recruitment advertising, including making it a centerpiece of this year’s holiday campaign featuring much of the cast from the 1999 movie “Office Space,” whose mythical boss Bill Lumbergh intones that he’ll need members “to come in seven hours early” to take advantage of first dibs on online Monday deals.

Expanding the base

Walmart now is essentially tied with Amazon and Target in brand favorability among Gen Z, all three of them in the 79%-80% favorable range, in tracking research by Morning Consult Brand Intelligence. Walmart actually beats all retailers, even edging Netflix, as the No. 5 brand overall in favorability among Gen Z men.

While Walmart spends plenty on advertising compared to most rivals, it’s easily outspent by Amazon at this point.

Ultimately, though, Walmart’s ad budget, estimated at $3.1 billion last year by the Ad Age Datacenter, is overshadowed by what more than 140 million weekly shoppers experience at more than 5,300 U.S. stores.

Beyond the marketing, retail brands get built by shoppers feeling they’re treated fairly. That’s an area where Walmart has been winning in small ways. While many rivals charge 50 cents per debit card transaction and another $1.50 for people to get cash back from their accounts, Walmart does both for free.

Services such as charging no PIN fees on debit transactions, White said, “provide incredible value for our customers and demonstrate how Walmart fits into their lives.”

That helps with Walmart’s lower- and middle-income shoppers, but much of its recent success has come from households with incomes of $100,000 or more.

Walmart’s purchase consideration ratings among all shoppers stayed constant at 67% in October 2022 vs. a year ago, according to Morning Consult, but purchase consideration among people with household incomes $100,000 or above rose three percentage points to 65%. Favorability and purchase intent among Gen Z shoppers has shown a similar recent uptick for Walmart.

“Roughly 70 plus percent of our share gains are coming from higher-income families,” White said. “I think that speaks to everyone feeling the pressure of inflation.”

See all of Ad Age's 2022 Marketers of the Year here.