Walmart's latest move confirms the death of the American middle class as we know it

Walmart is getting into aspirational retail — and it says a lot about the American economy.

On Friday, Walmart announced it was acquiring Bonobos for $310 million in cash. The high-end men's retailer attracts young, urban customers with its slim-fitting pants, shirts, jackets, and suits and tuxedos that start around $500 and cost as much as $1,000.

In recent months, Walmart has purchased several trendy, online retailers, including the hip fashion brand ModCloth, outdoor gear retailer Moosejaw, and shoe store ShoeBuy.

These brands' wares are different from the apparel typically sold by Walmart that's better known for low prices than fashion innovation. ModCloth's dresses can cost between $60 and $150, whereas Walmart's dresses are usually priced between $10 and $25.

"The acquisitions of ShoeBuy and Moosejaw, in addition to Hayneedle, gave us immediate expertise and capabilities in new, more upscale categories of merchandise," Walmart CEO Doug McMillon said during a call with analysts in February.

The addition of more "upscale" merchandise demonstrates the changes that the discount retailer has been forced to grapple with as the number of potential middle-class customers plummets. Between 2000 and 2014, middle-class populations decreased in 203 of the 229 metropolitan areas reviewed in a Pew Research Center study.

In an economically divided America, Walmart has tried to sell not only to shoppers looking for extreme discounts, but also to shoppers with higher incomes seeking higher-quality items.

Walmart has been working to increase its sales to more affluent customers for years, especially in e-commerce.

"The nature of e-commerce, the nature of the Neighborhood Markets and other things we're doing do create an opportunity for us to be even more relevant to customers that are at the higher end of the scale," McMillon said at an investor meeting in October 2015, Fortune reported.

The retailer has a long way to go until it catches up with rival Amazon — especially as the e-commerce giant expands its apparel offerings.

Amazon is expected to surpass Macy's as the biggest seller of apparel in America this year. Amazon has similarly ventured into more high-end fashion, selling products by designers such as Zac Posen and Stuart Weitzman.

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Costco

While Costco (NASDAQ: COST) never puts up explosive growth, the chain moves ever-steadily forward. The warehouse club has been consistently growing its member base (which is where it makes most of its money) and has been increasing its number of locations by around 25 stores each year.

In its most-recent quarter the company saw 6% comparable-store sales growth in the United States and 5% worldwide. Through three quarters of its fiscal 2017 the chain has posted 3% same-store growth in the U.S. and globally.

Costco has simply not been phased by the growth of the internet. It has so far operated pretty much as it always has, delivering steady growth, strong earnings, and reliable predictability. Going forward that's unlikely to change and the chain may even be able to add some growth as it steps up its online efforts.

Photographer: Scott McIntyre/Bloomberg via Getty Images

Dollar General

In the face of the retail apocalypse discounters have, in general, done well and Dollar General (NYSE: DG) has led the way. It's not that the chain has impressive same-store growth. That number climbed by only 1% in its most-recent quarter and the chain predicts flat to 1% growth this year. But the company has found an appetite for its offering and created a steady model that has tremendous room for growth.

Dollar General added 900 stores in 2016 and plans to open 1,000 or more this year. That should keep the chain growing after a year in which it posted revenues that grew to $22 billion from $20.4 billion the previous year.

REUTERS/Jim Young

Wal-Mart

While Wal-Mart (NYSE: WMT) has had its struggles in dealing with online competition, the company has recently found its way. The chain put up stellar Q1 numbers, including raising overall revenue 1.4% to $117.5 billion and increasing U.S. same-store sales by 1.4% on a 1.5% increase in traffic. In addition e-commerce sales grew by a stunning 63% over the same quarter last year.

Much of the chain's digital success can be attributed to its putting Jet.com CEO Marc Lore in charge of its full online operation. Lore fostered a start-up mentality and has helped the chain move from being a physical store first to one that meets customers however they are looking to be served.

REUTERS/Daniel Becerril

Nordstrom

Nordstrom (NYSE: JWN) has proven to have a very loyal customer base that has helped the company thrive even in the current challenging retail market. In Q1 the company raised its EPS from $0.26 last year to $0.37 in 2017 while net sales grew by 2.7%. Comparable-store sales did fall by 0.8%, but the company now does an impressive amount of its business -- about 25% -- through its website. In addition total customer counts rose during the quarter.

REUTERS/Rick Wilking

Best Buy

Best Buy (NYSE: BBY) may be the least likely company on this list. At one point the chain was left for nearly dead. It had fallen victim to being used as a showroom where customers would look at merchandise then order it online from another store.

CEO Hubert Joly has brought the company all the way back however by refocusing its stores and aggressively cutting expenses. He also recently declared that the company was no longer in its "Renew Blue," turnaround stage, but had entered a new period.

"We are energized about our opportunities and the strategy we are pursuing, he said in the chain's Q1 2018 earnings release. "We believe we are uniquely positioned to help our customers in a meaningful way with our combination of multi-channel assets -- including our online, store and in- home capabilities, and I love how our teams are mobilized to deliver on our mission and Build the New Blue."

REUTERS/Mario Anzuoni

T.J. Maxx and Marshalls

The TJX Companies (NYSE: TJX) have two things that consumers seem to be willing to venture out to stores for -- low prices and a bit of shopping as a destination. The chain's Marshalls, T.J. Maxx, and HomeGoods brands are all discounters with revolving merchandise. You never know what you will find at what price, which makes it easier for consumers to justify leaving the house.

That's a formula that saw the chain grow sales 3% in Q1 2018, which followed a fiscal 2017 where they climbed by 10%. In addition the chain saw Q1 EPS climb from $0.76 last year to $0.82 this year giving the company a 10-12% increase in EPS for the the full year. In addition the chain expects 1-2% same-store sales growth in fiscal 2018 while it also plans to add to the 50 new locations it opened in Q1.

Photographer: Luke Sharrett/Bloomberg via Getty Images
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