Why Walmart is getting too expensive for the middle class

[dmcowen674]

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.

 

[SaurusX]

Ruining your follow up post.

 

[dmcowen674]

What will Walmart do?

What will Americans do?

Where do you shop?

 

[SaurusX]

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.

 

[Doppel]

Ruining your follow up post.

Love this.

 

[dmcowen674]

Ruining your follow up post.

Where do you shop?

 

[dmcowen674]

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.

Where do you shop?

 

[surfsatwerk]

I say let them shop at Target!

 

[SaurusX]

Where do you shop?

Sorry. Can't talk now. I'm at the yacht dealership.

 

[Matt1970]

So much for your rants about how Wal-Mart can raise their prices to pay their employees more and not lose any business.

 

[Lithium381]

Ruining your follow up post.

brilliant!

 

[dmcowen674]

I say let them shop at Target!

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

• Albertsons LLC 1,069 stores. Besides the parent company, some stores are operated under these banners: Acme Markets, Jewel-Osco, Lucky, Shaw's and Star Market, and United Supermarkets.
• Aldi 1,401 stores[1]
• Delhaize Group 1,300 stores[2] under the Bottom Dollar Food, Food Lion, and Hannaford banners.
• Kroger 2,460 stores.[3] Besides the parent company, stores operate under the Baker's Supermarkets, City Market, Dillons Food Stores, Food 4 Less, Foods Co., Fred Meyer (technically a hypermarket), Fry's Food & Drug, Gerbes Super Markets, Harris Teeter, Jay C, King Soopers, Owen's, Pay Less Super Markets, QFC, Ralphs, Ruler Foods, Scott's, and Smith's.
• Safeway Inc. 1,458 stores.[4] Besides the parent company, some stores are operated under these banners: Carrs, Dominick's, Pavilions, Randalls, Tom Thumb, and Vons.
• Kmart Super Center 26 stores[5]
• SuperValu Inc. 2,398 stores. The Save-A-Lot name is its most common banner; other banners are Cub, Farm Fresh, Hornbacher's, Shop 'n Save and Shoppers.
• SuperTarget 251 stores[6]
• Trader Joe's 353 stores[7]
• Walmart Supercenters 3,016 stores, plus 167 Walmart Neighborhood Markets.[8]

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

 

[Jaskalas]

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%.

In basic terms, they are paying more for healthcare.

 

[BUnit1701]

Im somewhat shocked, only 167 of the Walmart 'Neighborhood Markets', and we have 3 of them in Colorado Springs!

 

[glenn1]

Where do you shop?

Wherever you don't.

 

[Blackjack200]

Ruining your follow up post.

Haha.

And to the OP, I shop at Giant.

 

[Nebor]

Ruining your follow up post.

Amazing work. :biggrin:

 

[Blackjack200]

Sorry. Can't talk now. I'm at the yacht dealership.

Sweet, can you pick up one for me too? I'll pay you back in bread that I pulled directly from the mouths of starving children.

 

[Newell Steamer]

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.

*economic recovery is subject to how deep the hate/rage stick is up your ass

 

[Wreckem]

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

• Albertsons LLC 1,069 stores. Besides the parent company, some stores are operated under these banners: Acme Markets, Jewel-Osco, Lucky, Shaw's and Star Market, and United Supermarkets.
• Aldi 1,401 stores[1]
• Delhaize Group 1,300 stores[2] under the Bottom Dollar Food, Food Lion, and Hannaford banners.
• Kroger 2,460 stores.[3] Besides the parent company, stores operate under the Baker's Supermarkets, City Market, Dillons Food Stores, Food 4 Less, Foods Co., Fred Meyer (technically a hypermarket), Fry's Food & Drug, Gerbes Super Markets, Harris Teeter, Jay C, King Soopers, Owen's, Pay Less Super Markets, QFC, Ralphs, Ruler Foods, Scott's, and Smith's.
• Safeway Inc. 1,458 stores.[4] Besides the parent company, some stores are operated under these banners: Carrs, Dominick's, Pavilions, Randalls, Tom Thumb, and Vons.
• Kmart Super Center 26 stores[5]
• SuperValu Inc. 2,398 stores. The Save-A-Lot name is its most common banner; other banners are Cub, Farm Fresh, Hornbacher's, Shop 'n Save and Shoppers.
• SuperTarget 251 stores[6]
• Trader Joe's 353 stores[7]
• Walmart Supercenters 3,016 stores, plus 167 Walmart Neighborhood Markets.[8]

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

Non SuperTargets have large food sections these days.

 

[Wreckem]

Im somewhat shocked, only 167 of the Walmart 'Neighborhood Markets', and we have 3 of them in Colorado Springs!

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.

 

[Wreckem]

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.

 

[olds]

ruining your follow up post.

bwahahahaha! :d

 

[DrPizza]

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.

 

[Blackjack200]

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.

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.