Desperate times: Shoppers cut back on baby formula
Posted
Oct 22 2008, 12:03 PM
by
Anthony Mirhaydari
Rating:
Point-of-sale data from Wal-Mart shows that the pressure on America's consumers has reached a critical level. In what CEO Eduardo Castro-Wright calls a "disturbing" trend, the retailer is seeing a surge in baby formula sales when people cash their paychecks -- a sign people are putting off formula purchases until the last minute.
According to a recent poll, personal financial security was the number one concern for 80% of Wal-Mart's shoppers, up from 65% a few months ago.
But the fact that more than a few families are forced to cut feedings to their newborns or change to breastfeeding should be worrying for retailers heading into the holiday season, policymakers trying to ward off a deep recession, and those concerned for the youngest among us. Moreover, things are likely to get worse before they get better.
Americans are cutting back as asset values fall, unemployment rises, credit becomes more scarce and prices for food and fuel remain elevated. Wal-Mart's data also showed a double-digit drop in credit as a form of payment, which indicates that many shoppers have maxed out their credit cards. These shoppers are reverting to a paycheck bound feast-or-famine shopping cycle.
Relief could come in the form of a second economic stimulus package, which is gaining bi-partisan political support. The idea was recently endorsed by Fed chairman Ben Bernanke, who called it "potentially helpful and worthwhile" and said "consideration of a fiscal package by the Congress as this juncture seems appropriate." Bernanke went on to specify that any package should include measures to increase credit availability to homebuyers and consumers.
Instead of more money in the mailbox, lawmakers are focusing on infrastructure spending, aid to cash strapped states, and increased funding for food stamps and unemployment benefits. For those worried about baby formula, the help can't come soon enough.
Disclosure: I don’t own or control shares in any of the companies mentioned. I can be contacted at anthony.mirhaydari@live.com
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