Wal-Mart CEO Points Finger at Rising Gas Prices
Wal-Mart shoppers are "running out of money" at a faster clip every month, according to recent comments from the company's CEO, Mike Duke.
In a "gathering of industry watchers" in New York on Wednesday, Duke said that "we're seeing core consumers under a lot of pressure", and that "this end-of-month cycle is growing to be a concern."
The typical Wal-Mart shopper will cash their paychecks at the beginning of the month and then stock up on bulk items. As the month goes on, these "typical" Wal-Mart shoppers will continue to visit the store for fresh fruits, vegetables, milk, etc. According to Duke, the typical Wal-Mart customer that lives paycheck to paycheck is running out of money faster each month, and this is causing the number of end-of-month purchases to drop off at an alarming rate.
According to Duke, "there's no doubt that rising fuel prices are having an impact".
According to GasBuddy.com, the average price of a gallon of regular gasoline in the United States is currently $3.89/gallon. This is up dramatically over the last seven months or so, as a gallon of regular gasoline cost just $2.68 in October of 2010.
In many parts of the country, gas is already well over the $4/gallon mark. If you live in California, for instance, then you are probably paying around $4.20 per gallon. With the summer months approaching, there is a strong chance that people in many cities across the country will be paying $5/gallon or more. There is no doubt that these rising gas prices are putting a pinch on the typical US consumer.
In addition, food prices are marching higher as well, partly due to rising oil prices.
So, when you combine higher gas prices with rising food prices and a high national unemployment rate, you are left with a US consumer that is struggling to stretch their paychecks through to the end of the month. In addition, a brutal recession has stripped many people of most (or all) of their savings.
Wal-Mart's CEO said that the company is offsetting the cost of rising food prices with reduced prices on other types of merchandise (such as electronics), but Joe Average is still getting crushed, and things look as though they will likely get even worse through the summer.
Source: CNN.com - Wal-Mart: Our shoppers are 'running out of money'
Filed under: The Economic Meltdown