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Why Walmart is getting too expensive for the middle class

D

dmcowen674

No Lifer
2-5-2014

http://finance.yahoo.com/blogs/the-...expensive-for-the-middle-class-215417616.html

Why Walmart is getting too expensive for the middle class


Here’s a mystery of the modern economy: Growth is picking up, the job market is improving and most government data show the economy on the mend. Yet the parts of the private sector that ought to be enjoying a robust recovery aren’t.




The sliding fortunes of Walmart (WMT) may best represent this recovery gap.

Walmart, though known as a discounter, may be too expensive for millions of shoppers finding themselves more pinched — not less — as the pace of the so-called recovery accelerates.

“Their consumer is shifting downward,” says Joe Brusuelas, chief economist for financial-data firm Bloomberg LP. “The competition for Walmart is changing. It’s now dollar stores.”

Walmart is hardly the only retailer struggling. Mass-market chains such as J.C. Penney (JCP), Best Buy (BBY), Target (TGT), the Gap (GPS) and even mighty Amazon (AMZN) turned in disappointing results for the last three months of 2013, indicating a kind of retail recession that lingers long after the official recession ended in the middle of 2009.

So who’s doing well enough to pull retail sales numbers up to relatively healthy levels? Mostly high-end merchants such as Nordstrom (JWN) and Michael Kors (KORS), luxury automakers such as BMW and Mercedes, upscale appliance manufacturers including General Electric (GE) and even yacht manufacturers.

What’s alarming for retailers such as Walmart is the sharp drop in income in the middle tier of earners. In 2001, taxpayers earning $100,000 or less accounted for 60% of total income; in 2011, they accounted for less than 50%.



In basic terms, that means there are fewer middle-income families with money to spend, leaving retailers — and the overall economy — more dependent on a smaller group of high-income consumers.


Walmart will survive, and perhaps adapt. Maybe it will chase shoppers downmarket, which would probably cut into profitability.



Or it might go after wealthier shoppers, drifting away from its core business.



It could also stay right where it is, doing no better than the mainstream Americans it has long catered to.
 
In all seriousness, though, it's because the higher end of the economy has recovered more than the lower end. The lower end is where most of Wal-Mart's clientele resides.
 
So much for your rants about how Wal-Mart can raise their prices to pay their employees more and not lose any business.
 
surfsatwerk said:
I say let them shop at Target!
Click to expand...

http://en.wikipedia.org/wiki/List_of_supermarket_chains_in_the_United_States



Target is considered National but only has 251 that have Grocery Vs Wamart with over 3,000

I made a Poll in OT based on this National Chain list
 
dmcowen674 said:
Why Walmart is getting too expensive for the middle class
[...]
What’s alarming for retailers such as Walmart is the sharp drop in income in the middle tier of earners. In 2001, taxpayers earning $100,000 or less accounted for 60% of total income; in 2011, they accounted for less than 50%.
Click to expand...

In basic terms, they are paying more for healthcare.
 
Walmart & McDonalds saw an increase of sales and profits when the economy hit the shitter in '08.

Now that there is an economic recovery*, people aren't pinching pennies anymore,... so, I think it's this,...
Or it might go after wealthier shoppers, drifting away from its core business.
Click to expand...

*economic recovery is subject to how deep the hate/rage stick is up your ass
 
dmcowen674 said:
http://en.wikipedia.org/wiki/List_of_supermarket_chains_in_the_United_States



Target is considered National but only has 251 that have Grocery Vs Wamart with over 3,000

I made a Poll in OT based on this National Chain list
Click to expand...

Non SuperTargets have large food sections these days.
 
BUnit1701 said:
Im somewhat shocked, only 167 of the Walmart 'Neighborhood Markets', and we have 3 of them in Colorado Springs!
Click to expand...

That wikipedia page needs better updating. They have closer to 300 and are growing.

Plus Target expanded food to ALL of its stores(more or less). Most regular Targets have had decently sized food sections for the past ~2 years.
 
And for me, just like its sister company Aldis, Trader Joe tends to be cheaper than Walmart. However, both have limited selections.

I shop at Aldi's, Trader Joes, Cost Co and Walmart Neighborhood Market. Sometimes I end up at Tom Thumb or Kroger, especially win Coke/Dr Pepper is one sale for less than $2.50/12 pack. It just depends what I need as not everyone carries everything.
 
Could it also be that consumers are realizing that Walmart's prices really aren't the best on a lot of products? Consumers don't remember that many prices. So, when they see those common things - certain groceries, paper towels, etc., a little cheaper at Walmart, they assume everything is cheaper at Walmart. That is not true though.
 
DrPizza said:
Could it also be that consumers are realizing that Walmart's prices really aren't the best on a lot of products? Consumers don't remember that many prices. So, when they see those common things - certain groceries, paper towels, etc., a little cheaper at Walmart, they assume everything is cheaper at Walmart. That is not true though.
Click to expand...

I noticed that the first (and last) time I shopped at Wal-Mart. I thought that given all the controversy and its popularity, it would be significantly less expensive for grocery staples and I did not find that to be the case.
 
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