Wal-Mart says shoppers struggle to afford basics
Posted
Oct 27 2008, 02:06 PM
by
Karen Datko
Rating:
As Wal-Mart shoppers go, so goes the nation, one could say. So when a top Wal-Mart executive spoke recently about what he called "disturbing" consumer trends, people sat up and took note.
Eduardo Castro-Wright, CEO for the huge retailer's U.S. operations, said baby formula sales are now spiking at the beginning of the month, when paychecks and government checks come out. Wal-Mart has also noticed increased sales overall at the first and middle of the month -- another sign that more people are living paycheck to paycheck.
"When families put off buying baby formula until the paycheck arrives, they are teetering on the brink," Andrew Leonard lamented at Salon.com (adding that needy families can get help to buy formula and other food for children from WIC). Reuters' Shop Talk blog called Castro-Wright's comment "one of the more chilling consumer-spending anecdotes thus far."
Why are Wal-Mart's pronouncements taken so seriously? "Wal-Mart's incredible data-gathering apparatus enables us to view economic shifts in remarkable detail in pretty close to real time," Free exchange at Economist.com explains.
Other disturbing trends:
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The CEO said people "have maxed out their credit limits," USA Today reported. Wally World expects a double-digit drop in credit card use at its U.S. stores this year.
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In a recent poll, 80% of Wal-Mart shoppers said "personal financial security" is their top concern, up from 65% a few months ago. "Most consumers are worried about: 'Will I have enough to put food on the table so my family can eat?'" Castro-Wright told a luncheon held by Town Hall Los Angeles.
Some of the shopping trends he mentioned are practices we recommend here at Smart Spending. As Beth Pinsker said at WalletPop, they "are not necessarily bad on their own."
Apparently, more people are making Wal-Mart their store of choice. Sales were up by 2.4% in September, fueled by spending on food and other essentials, while they fell at Target and dropped dramatically at higher-end stores. "Wal-Mart is the 2008 version of the Great Depression soup kitchen," O'Dwyer's Blog said.
(Luckily, Castro-Wright said Wal-Mart won't cut back on its philanthropic activities. And, in more good news, a Wal-Mart official told the Yakima Herald-Republic that Wal-Mart will launch a program next month to donate meat and other high-protein foods.)
