WASHINGTON — H. Lee Scott, president and chief executive officer of Wal-Mart Stores Inc., said Sunday he expects the recession to present challenges in the short term as consumers scale back purchases amidst intensifying job insecurity.
This story first appeared in the December 15, 2008 issue of WWD. Subscribe Today.
Participating in a roundtable discussion on NBC’s “Meet the Press” with new host David Gregory, Scott addressed a wide range of economic issues, ranging from changing consumer buying patterns, to government intervention in the home mortgage market, to a multibillion-dollar economic stimulus package that President-elect Barack Obama is preparing with Democratic leaders and is expected to include a massive job works program and tax relief for the middle class.
Scott said consumers have noticeably changed their shopping behavior at Wal-Mart stores, which has thus far bucked the trend and reported sales growth as other retailers struggle with lagging consumer demand and dismal economic news.
“We’re seeing that our customers have a great deal of faith that the government will ultimately take the right action and be successful in addressing the current situation but the number-one issue today is their concern about their jobs,” said Scott.
Wal-Mart customers are finding ways to save money by increasing “self-treatment” of health problems, which has lowered the rate of growth in the company’s sales of prescription drugs, as well as increasing their food storage and use of leftovers, according to Scott.
“Consumers are in fact changing their behavior,” he said. “We’re optimistic over the long term. Certainly the next few months are going to be very challenging.”
NBC host Gregory, noting that Wal-Mart has been criticized on health care issues and on “driving down wages,” asked Scott whether the retail giant should have a responsibility in helping the government with the employment picture.
“Well, we’ve been fortunate with our business to have added 30,000 jobs here in the U.S.,” said Scott, noting the company has also improved its health care options to its employees.
“We get, quite honestly, some people who say we shouldn’t push for this energy policy, for this reform in health care and that Wal-Mart shouldn’t be involved in that, and I think they are just wrong,” said Scott. “I think today, more than ever, we have a responsibility to participate and I don’t mean on the negative side, participating by just being critical of what is proposed, but by being a partner in these solutions.”
Scott also said the new president and Congress need to have a long-term outlook, beyond the proposed economic stimulus package, to turn the country around.
Asked what kind of indicator would tell him whether the economy is worsening or improving, Scott said he relies on his international sales reports, as well as the individual purchases in the stores.
“What we’ll be looking for is that the Wal-Mart mom is confident that the future and the money that is available to her will continue to improve and then we’ll see it in our sales,” Scott said.