Retailers with pricing power control their own destiny, enabling them to protect margins against inflation.
That pricing power can look different, depending on the retailer. For some, it may be keeping the prices of the products on their shelves low compared to competitors, so they can keep their current customers happy. They can also win over new shoppers who are becoming more cost-conscious and are trying to stretch their budgets further.
For other retailers, it may be having the ability to raise prices without alienating or losing a significant amount of their customers. They each have different operations, but both Walmart (WMT 0.93%) and Ulta Beauty (ULTA 6.10%) have their own special pricing power.
Image source: Getty Images.
Walmart's size gives it negotiating power
Walmart is built on offering low prices, and it can offer them because of its incredible reach. Walmart operates more than 10,900 stores and clubs, including more than 3,500 U.S. Walmart Supercenters. The company says that each week, more than 280 million people visit its stores and websites, and even more people can visit its locations soon, with 20 new stores expected to open between now and the start of 2027.
With that kind of power, Walmart can dictate prices to suppliers. If the suppliers want to get on Walmart's shelves and on its website, then they need to play by its rules or miss out on reaching those millions of customers each week.
Another piece of sneaky pricing power Walmart has is through selling its own products. It sets those prices low, so suppliers with similar products in Walmart's stores have to keep their own prices in check to avoid losing market share. Those low prices are also becoming more appealing to higher-income shoppers, as everyone is looking for deals wherever they can be found.
NASDAQ: WMT
Key Data Points
"The majority of our share gains came from households making more than $100,000," CEO John Furner said in the company's fiscal fourth-quarter 2026 earnings call.
For value investors, Walmart looks pricier than it has been in recent quarters, with a forward price-to-earnings ratio of 42.3. Expectations are high, but Walmart has a few revenue sources to grow into its value, thanks to a budding ad business and its Walmart+ membership offering.
A specialized retail in a massive market
Ulta Beauty is a specialized retailer in the beauty sector, selling hair care products, fragrances, and cosmetics across 1,500 stores. It also has strong positioning in a crowded space, with an estimated 9% market share of the U.S. beauty market in 2024 that was valued at $118 billion.
It may not initially seem like a company with pricing power, but Ulta has a loyal customer base. To that point, the company's customers are unlikely to massively revolt if it raises prices. Pushback is also offset by it offering a mix of luxury and mass-market products, giving customers more options to fit into their budgets.
It has millions of members in its loyalty program, with those members accounting for nearly all of Ulta's sales. The company is now expanding to build that customer base beyond the U.S. with its recent international expansion. It opened its first store in Mexico and its first store in the Middle East in 2025.
NASDAQ: ULTA
Key Data Points
So far this year, Ulta has been in a rough stretch. Shares are down as the company navigates an increasingly competitive market. Outside of international expansion through its own stores, it will need to seek new partnerships to attract more clients. Ulta launched a partnership with Target in 2021, but it will conclude this August.
Between the two, I see Walmart as the stronger retail stock, given its size, multiple revenue generators, and a dividend payout. That said, each company has its own pricing power and growth opportunities, making both retailers worth further consideration as potential investments.
