The last few years have seen some striking trends from America’s largest retailer and one of the biggest employers. Walmart has a unique customer base. Only about half of Walmart’s consumers have checking accounts. Many of their patrons cash a weekly paycheck and buy their essentials at Walmart.
For those consumers an increase in gas prices or loss of the payroll deduction is a loss in real purchasing power. So it is not surprising that a VP at Walmart sent out emails that Bloomberg picked up lamenting the first week in February was a disaster in sales. Folks weren’t showing up in the stores.
I once heard a presentation by the VP of Merchandising for Walmart state that for every penny rise in gas price Walmart lost tens of millions in sales. Gas prices have been rising so Walmart’s sales are hurt. Couple that with an average loss of $15 a week in disposable income from the payroll tax expiration and it showed up immediately in a sales crisis at the land of opening price points.
Now your company may not depend on Walmat style consumers for your customer base but the difference is likely degrees and not a different reality. In many things in life what is bad for one part of a spectrum may be good somewhere else. When the base consumer in the US has less real purchasing power it is felt all over the food chain (pun intended). The only difference is degrees.
The US consumer is 70% of GDP. When the consumer loses purchasing power that will be felt throughout the entire channel of distribution no matter what end product you are selling.
Does your business have a plan to deal with a reluctant consumer? How has your offering adjusted to the new consumer?