Wal-Mart customers have been stretched to the limit financially, company CEO Mike Duke revealed at a New York event Wednesday. Rising gas prices, rising rents, sagging wages and the increased cost of commodities have one customer after another “running out of money,” according to Duke. Frankly, Wal-Mart is worried.
Wal-Mart sales are sagging
Duke appears to be conveying a message that he understands his customers’ pain. Living from paycheck to paycheck must indeed be devastating, as Wal-Mart sales numbers for customers who typically shop in bulk at the beginning of the month when paychecks arrive were down in April. It’s all part of a downward sales trend the company has been tracking.
“Purchases are really dropping off by the end of the month even more than last year,” Duke said. “This end-of-month [purchases] cycle is growing to be a concern.”
As a yardstick for the health of the U.S. economy, Wal-Mart is in the position to make or break the psyches of analysts and laymen who are hoping for a speedy recovery. With over 140 million shoppers per week, Wal-Mart would certainly be one of the best indicators of retail recovery, but Duke doesn’t believe the recovery ship has arrived, as the “people of Wal-Mart” aren’t helping the company reach its sales projections.
How Wal-Mart deals with recession
As food prices are up worldwide, Wal-Mart has charged customers more at its Supercenter locations for fresh groceries. However, items like electronics have gone down in price as the retailer fights to stem the tide of seven straight quarters of sales decline. Not only that, but Wal-Mart has cut down on electrics inventory to free up space for lower-priced products. Sagging electronics sales were reputed to be a “prime factor” dragging down sales, according to Bloomberg.
“We couldn’t possibly sell enough TVs,” said Bill Simon, President and CEO of Walmart U.S.
Wal-Mart prices back in focus
According to Duke, the “every day low prices” commitment that made Wal-Mart a giant was partially lost over the past two years. Now, in order to ease the sting of fuel costs for customers, Wal-Mart will work harder to become a “on-stop shopping stop” that will keep people from having to drive more to purchase what they want and need. For those customers who cannot make it to the store, Wal-Mart has even tested an online grocery delivery service called Wal-Mart to Go (Project Titan by company insiders). Home delivery service fees begin at $5. The San Francisco Chronicle reports that the service has been tested in San Jose, Calif., to positive reviews.