The average household income of people who shop at WalMart and not Target is above what I lived on as a student, but below the income of my (mostly part-time-employed) student household.
Three years ago Jeff Matthews commented on the difference by saying WalMart had "Target Envy". This reflected income demographics in the US - where the squeeze was already on lower income households (oil etc) and the middle income demographics were doing middling to OK.
Target envy might be a thing of the past - but it is clearly getting worse in Wal Mart's demographic. Paul Kederosky talks about things that WalMart is now seeing.
Wal Mart has always had a pay-check related shopping spike - with a substantial number of customers living (as I did when a student) from pay stubb to pay stubb.
But for the first time they are having pay-check driven spikes in the sales of baby formula suggesting the economic pressure is more widespread.
It is about the real economy now.
John Hempton
4 comments:
Frightening stuff indeed.
Thanks John,
I have always thought Wal Mart and other low budget retailers would be beneficiaries of a slow down as they pick up people going down market. A demographic more than enough to offset those that fall out of their demographic through not being able to afford even down market retailers.
Is this downturn different, or am I wrong in the above?
David Welsh
Target would seem to be better, but wasn't there an issue with their credit cards?
Can't remember exactly, but I do remember them last year giving a card to anyone who asked.
As for the baby formula- I worked at a supermarket in an economically depressed area. Baby formula is much more a measure of fraud than anything else. It's value as a trading medium is very high. One reason is that it is one of the few 'high ticket items' that can be bought with WIC and food stamps. The person can then get it back into cash at about a 20% discount.
If one were going to scam the system like this, you would buy a lot where they have a lot, at the lowest price (assuming that at wmt) as soon as you could. Then hold and sell over the month. We used to call it food stamp day, 1st and 15th. Could be the new wiskey? There isn't as much tax involved.
Don't have any figures, just a series of observations made during the period of about 1991-1996.
I did a lot of work on the Target credit card once. It looked absurd (delinquency was high) but it worked ok (default was low).
I have an explanation - but it is too speculative for this blog...
J
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