Wal-Mart’s core shoppers are running out of money much faster than a year ago due to rising gasoline prices, and the retail giant is worried, CEO Mike Duke said Wednesday.
Economists had predicted that higher fuel prices would have consumers making fewer shopping trips and spending less money, and if Walmart is worried about this, that’s significant. Walmart has possibly the best time series analysis in U.S. retail. They can tell what days their customers get paid by how much they spend and the items they buy that day, as compared to the day before. Now they say that their loyal “core” customers are coming in to the store just once a month, right after they get paid, buying everything they need for the month. Some customers are skipping their visit to the store in some months. It’s a sign that consumers are resisting the high cost of shopping trips, a cost that now starts with the cost of fuel.
U.S. fuel prices continue to rise, and the increase has already canceled out the consumer-boosting effect of the latest stimulus package worked out in a deal between the White House and Congressional Republicans in December. An extra $40 in the paycheck doesn’t go far if the cost of filling up the fuel tank is $50. There is some irony in this, of course: the gasoline that consumers burned in the extra shopping trips in February and March are part of the reason gasoline prices have gone up. If U.S. consumers were to somehow become exuberant, something you ordinarily hope for to spur a quick recovery from a recession, the increased driving would send gasoline prices up to $5 a gallon, high enough to put a damper on everything.