The Walmart Conference Call: Consumers Struggling

08-17-2011 • Businessinsider.com

…recently observed several consumer focus groups, and it’s clear that many consumers are still struggling. They’re trading down to stretch their budgets, buying a lower-priced brand of detergent, moving from branded canned goods to private label and purchasing half gallons of milk instead of gallons. …The economy remains challenging for our core customers. Customers are still consolidating trips due to higher year-over-year gas prices. The swings in sales due to paycheck cycles remain pronounced, and our stores must staff and stock for the volatility both up-and-down. We also have seen an increase in the number of customers relying on government assistance for food and necessities for their family. Our grocery business continued its positive trend and again delivered low-single digit positive comps for the period. Food remains a key traffic driver to our stores. The strong performance during the July 4 weekend offset softness in the Memorial Day weekend. …Sales across dry grocery continue to accelerate …Food inflation has replaced gasoline price as the most important household expense concern. In addition, more than 15% of Walmart moms in our monthly survey have experienced the loss of a household wage earner’s job in the last year. Almost 40% of these Walmart moms indicate they’re holding off or eliminating items they would normally buy, reinforcing the need for us to drive Every Day Low Price. Moms of all income levels showed a drop in confidence over the last year, with middle-income moms showing the greatest drop.