NEW YORK — When the head of the world’s largest retailer opines about the economy, people listen.
This story first appeared in the April 16, 2009 issue of WWD. Subscribe Today.
Wal-Mart Stores Inc. president and chief executive officer Mike Duke used the “Today” show as his pulpit Wednesday morning, sharing insights gleaned from the spending habits of the company’s enormous customer base. With 140 million visitors each week, Wal-Mart is something of an economic indicator.
“I think we all want to be hopeful,” Duke said. “We’re all looking for a better day when we start to come out of this. In talking to our customers all across the country, I think there’s still a lot of stress, with the job security challenges and unemployment where it is.” Duke so far said he hasn’t seen evidence of President Barak Obama’s “glimmer of hope” message, delivered in a speech on Tuesday. Obama said his stimulus package had started to “generate signs of economic progress.”
“This may be a trailing impact,” Duke said. “There may be some period of time from seeing the first data points to actually translating that to the 140 million Wal-Mart customers around the country and actually feeling it when they come into our stores.”
Asked what indicator in terms of a product will signal the recession is over, Duke said, “First of all, I don’t see us coming out of this recession where we just bounce out and come back. This is one that’s going to take some sustained change in the way families live. In some cases, expensive cuts of meat are down. When some of that starts to come back” consumers will be feeling better about their financial situations and future.
Duke noted customers are making difficult choices to rein in their spending. “Infant’s and children’s apparel is much stronger in sales than adult apparel,” he said. “What that says is that mom and dad will sacrifice but are not going to make their children sacrifice what they wear.”
Electronics such as flat-screen TVs and Wiis are selling briskly at Wal-Mart, a purchase that might seem counterintuitive when money’s tight. “It’s interesting because I think customers are cutting back on outside entertainment,” Duke said. “Many families are cutting back on vacations.”
Another interesting bit of social anthropology gleaned from consumer behavior is the popularity of vitamins. “Vitamins do well during a recession,” Duke said. “People say, ‘I can take vitamins, which are not expensive, and stay healthy.’”
Another trend the Wal-Mart ceo has noticed: “We are seeing more cash as a percentage of sales at our registers. Part of it is a conscious decision, but many customers don’t have other options any more.”
Duke’s comments did little for Wal-Mart stock. Shares t closed the day up slightly at $51.29, a 0.33 percent gain. Amongst Wednesday’s major retail movers, Saks Inc. rose 8.8 percent to $2.85, while Nordstrom Inc. shed 4.9 percent to $19.94. Macy’s Inc. gave up 3.6 percent to close at $11.56. On the whole, the S&P Retail Index slipped 1.54 points, or 0.48 percent, to 318.11. The Dow climbed late in the day to close up 109.44 points, or 1.4 percent, to 8,029.62.