Confidential Wal-Mart Memo Discloses Substantial Drop In Store Traffic Compared To Year Ago
As if we needed another confirmation that the US consumer is running on empty, here comes Bloomberg with valuable disclosure from an internal, and supposedly confidential, Wal-Mart memo on store traffic patterns which indicate that in US store locations open for at least a year have seen a 2.6% drop in traffic in the February to June period compared to a year earlier. While this may not sound huge, keep in mind the company is massively leveraged to even the smallest marginal moves in traffic, courtesy of already razor thin margins. Specificall, the Wal-Mart stores in question had "82.8 million fewer visits through the first five months of the company’s fiscal year." More than anything this is an indication of just how exhausted the US consumer is becoming if even the most beloved, widespread and cheapest option for purchases is now being shunned outright. Bloomberg continues: "Wal-Mart’s plan to recapture customers by returning thousands of products to U.S. store shelves has failed to reverse a decline in foot traffic at the world’s largest retailer, said Jeff Stinson, an analyst at Cleveland Research Co. That’s primarily because Wal-Mart’s core low-income customers are shopping less and going to other retailers more often, according to two recent shopper surveys." This should not come as a surprise to anyone, since frequent Zero Hedge readers will recall the post in which the CEO of Wal Mart America said that "shoppers are running out of money"; and there is no sign of a recovery." When it comes to marginal traffic, it appears shoppers have just run out of money. And that includes those who no longer pay their mortgage and pay for everything with their now well maxed out credit cards.
Wal-Mart, led by Chief Executive Officer Mike Duke, is restoring an average of 8,500 products to its stores to lure back shoppers still pinched by persistent unemployment and gas prices that have risen 36 percent in the past year. Sales in U.S. Wal-Mart stores open at least 12 months have declined for eight straight quarters.
Wal-Mart’s traffic decline comes as some of its direct competitors are getting more visits.
Wal-Mart’s decline is close to the 2.5 percent drop in shopper traffic at all retailers from February through June, according to retail industry data provider ShopperTrak in Chicago.
The two shopper surveys, from Morgan Stanley and retail consultancy WSL Strategic Retail, found that the removal of items from stores in 2009 to reduce clutter wasn’t among the top reasons why shoppers are visiting Wal-Mart less frequently.
“Consumers are not very concerned about removed items or breadth of assortment,” Mark Wiltamuth, an analyst at Morgan Stanley, said in a July 11 report that included the survey. In the WSL survey, 7 percent of Wal-Mart shoppers said they were going there less because it stopped carrying products they buy.
The scariest news for Wal-Mart: it no longer has the deep discount retailer halo it has held for decades:
Many shoppers don’t believe Wal-Mart’s prices are the lowest anymore, the surveys found. These consumers are shifting more of their spending to dollar stores, Target, and supermarkets such as Kroger’s, WSL said. Both surveys polled about 1,500 shoppers.
“The biggest surprise from our survey is that Wal-Mart appears to have lost some of its low-price reputation,” Wiltamuth said in the report. “Wal-Mart now has a price perception problem.” The New York-based analyst rates the shares “equal-weight.”
“They are taking incremental mini-steps at a time when they need to knock shoppers’ socks off,” Liebmann said.
The possible culprits for the drop are many, but none of them change the fact that there is less shopping happening:
Traffic declined by an undisclosed amount at U.S. Wal-Mart stores in the fiscal year ended Jan. 31 after increasing 1.3 percent in the previous year. Shopper visits continued to drop in the first quarter of the current fiscal year. Duke has said customers are making fewer shopping trips and spending less when they do shop because of higher gas prices.
“Our priority right now is trying to provide that opportunity for customers to go to one place and have everyday low prices on the full assortment that they purchase,” Duke said at an April investor conference.
Wal-Mart has forecast that the change in second-quarter fiscal 2012 comparable-store sales in the U.S. would be negative 1 percent to positive 1 percent. Cleveland Research estimates same-store sales to be down as much as 2 percent.
“The data points don’t look great,” Dan Binder, an analyst at Jefferies & Co., said in an Aug. 2 note to clients. “There is downside risk to sales in the second quarter and potentially over the balance of the year.” The New York-based analyst cut his recommendation to “hold” from “buy” in the note.
In a May study from Deloitte Research, almost three out of four respondents said they are making fewer trips to the grocery store to save money and two-fifths said they are purchasing fewer items overall.
The worst news is that despite 3 years of failed attempts, US consumers appear happy to redirect funding from other sources of cash use, such as paying for mortgage (which will end up being the reason for a TARP 2 bailout of the banks soon enough), but far more averse to actually levering up, or, if they wish to do so, appear to no longer have the capacity. Which is easily the worst possible news for the Fed which is now actively preparing to launch QE3.
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Confidential and thus printed here.
Did you even read the opening paragraph before you posted?
No, I don't give a fuck. I'm a headline chasing HFT algo and that's why we are bouncing of the lows on this Bloomberg wall-mart concoction which isn't worth a bucket of spit. But, but, feel free to read any garbage of your liking.
I frequent a Mexican supermarket that is fairly close to a Ninty-nine cents only store. I listen to the customers as they shop and they are constantly making comparisons to Wal-Mart. The closest Wal-Mart is maybe 4 miles away. Towards the end of the month, a lot of local stores will have few customers in them, including the Staters Brothers supermarket.
"I frequent a Mexican supermarket"
Well excuse me John D. Rockefeller!
So how's that WMT long position going?
wasn't welfare recently reduced by 10% or so?
wasn't welfare recently reduced by 10% or so?
10% welfare reduction + 10% welfare reduction = 20% welfare reduction? Really?
Isn’t breaking into confidential information Murdoch’s specialty? Is Bloomberg now taking over where Murdoch left off? And, of course, there’s the believability factor. It’s difficult enough to believe government reports let alone Bloomberg’s analysis of government reports; and now we’re supposed to believe “leaked” reports of a company that Bloomberg would not be supporting.
Shades of Schumer versus IndyMac?
And, to make matters more suspect, this story is, in essence, six months old. Somebody has just warmed over the story and attached some statistics to it. It’s just a repeat of the banker-cabal attack on Wal-Mart. Bankers don’t like Wal-Mart? How about that avalanche that materialized when Wal-Mart tried to establish its own bank?
Spot on, LMAO.
Schhhh, you are stirring the sheeple and they are in Junk-mode.......
BOO! Whoops. I didn't mean to start a cattle... I mean a sheeple stampede.
They can always hope for a last minute, Q4 binge to stock up on 100w incandescent light bulbs before the government makes them illegal in 2012.
I have found so many deals at the many dollar stores around my area. Canned foods, rice, beans.. utilty items.. for a buck.
Keep in mind that you get what you pay for...
yeah, I do.. losts of times it's decent brand goods or goods made by the same company for a chain that was bought out on bid. I agree there are some crappy things there too.. but that's why you have to sort through it and pick the good stuff.
Agreed...My wife picks up a few things there occasionally. Cannot beat the $1 Mylar baloons. Just saying that a lot of stuff is junk. Kitchen stuff, no worries. I'm just thinking that the $1 food would not necessarily be the highest quality ingredients. But what do I know? I do not buy food there.
I lost my mind when I found two-packs of light sticks for a buck.
I bought a cheap, Chinese made paint roller for $2 at Dollar General the other day, because ACE was a few miles away from the rental I was painting. It didn't last one room before it broke. Duct taped it to finish the job, then tossed it. It was the worst, cheapest piece of crap I had ever used.
I hope you're not a professional painter by trade. Trade painters know all too well the cheapies at the dollar stores aren't worth it.
Hard to sort out the counterfeit Colgate they had a couple of years ago that had anti-freeze in it.
I bought some name brand dishwasher packets there a couple of months ago for a slight discount, then used them later. My wife asked me if there was something wrong with the dishwasher, the dishes and glasses were not very clean, and the forks & spoons were very bad. It took a couple of days before I realized it could be the packets I got at the dollar store causing the problem. So I went to my normal supermarket, bought exactly the same brand and type, and did a load. Night and day. So I don't know if they were selling seconds, QC failures, or counterfeit. I know this, however, I did not get a deal.
I'm all for bargains, but sell me dodgy goods and I don't ever come back.
The dishwasher stuff is a known issue. They have removed the phosphates (the shit that actually cleans) from the detergent. From what I understand, it was due to greeny pressures. I bought name brand shit from the store at a much higher price and the same crap happened with un-washed utensils etc.
Obviously, at least 5 (for now) ZH members are dollar store shoppers.
I'm not sure why the article doesn't mention Amazon. I pay AMZN $79 a year, buy tons of stuff, pay no sales tax, don't have to start and drive the car, and have everything delivered to the house in a couple of days. The stuff I can't get from Amazon is purchased at Costco. Pffft WalMart.
and with prime membership you get unlimited instant videos.
I have a prime membership too.. I find lots deals on foods and good. The saving on shipping has paid for my account already.
Shopping at the Dollar store is great, it's so convenient and casual and you don't have to get all dressed up....like you're going to WalMart or something.
You mean like these fine folks?
http://www.dailymail.co.uk/news/article-1211216/People-Wal-Mart-Dude-I-just-saw-goat-Wal-Mart-New-website-charts-gloriously-absurd-shoppers-worlds-largest-retailer.html
A cop I know who works the counter-gang unit shops WalMart to stay abreast of the latest trends in prison tattoos.
Or do you mean like these people:
http://www.youtube.com/watch?v=YvxNgdFeWqM
Turn off half the lights.
Went to a BestBuy and noticed that this is what they did. It's normally quite bright in there, but not this time around. Dark as hell. Not sure if it was for one day or standard policy going forward.
same here at 2 different best buys....they had the lights turned off on every other aisle. i thought they were replacing bulbs but they usually do that at night and they have to bring out those huge lifts.......
Walmart turns off the fucking air conditioning.
Have noticed this as well, in addition to the lights being "off" frequently. Here in the Deep South it is often 80deg F in the store and people fanning themselves in the checkout lines, which have not shrunk in length any....Wal-mart has also cut back in terms of staffing, usually less than half (or even less than 1/3rd) of the checkout lines are staffed even at "peak" times (weekend afternoons, for instance). As always, your mileage may vary.
I was in walmart this afternoon, it is payday week at nearby Fort Knox. The place was a ghost town. I went straight to a human cashier. I saw more employees milling around in the various areas than customers, and got harrassed by a kid in hardware several times, who saw I was buying screws and told me I could buy a bucket of those screws at Lowes for a couple of dollars and would have enough for years. I said that was a good point, however, I need the screws now and Lowes is a 28 mile round trip so the money I saved would be consumed in gas, never mind wasting my time.
My point? I think the sales are down at Walmart in my area. This is not normal, not even a couple of months ago.
Don't squeeze the Charmin ...
Being beat by the dollar store, what's next maybe a six bit store.
"dollar" store today, "1000 dollars" store next year.....
the dollar stores around here have about 20% of their merch price above a dollar now. before it didnt matter the size but now if an item is a 'jumbo' size they want $1.39 or $2.99......
"99cent stores" - they're out there apparently.
This makes complete sense when compared with the recent data that ILLEGALS (INVADERS) are returning to Mexico for employment, since unemployment in Mexico is 4.5%.
http://www.sacbee.com/2011/07/28/3799513/improving-mexican-economy-draws.html
Yes. As an interesting aside, border agents are now reporting more illegals climbing the fence to go south!
So you're a native american indian, LoneStar??
You should rethink the "Savant" part.
Sweet, let's ship our unemployed off to Mexico and then build a wall around it.
> ILLEGALS (INVADERS) are returning to Mexico
Ah, a socialist.
You think that all land somehow "belongs" to the public, so therefore I can't let Mexicans onto my own property - i.e. the property that I have property rights over - without your permission.
The same lack of ethics that says you can violate property rights in this instance is applicable to many other instances. For example, stealing peoples' wealth through taxation. But of course you haven't thought through things consistently. You just want property rights violated in ways that you choose.
That same CEO said he expected a huge jump in inflation by July of this year. Sure would be interesting to hear from him as to whether that is happening.
Also too bad we nolonger have MIT's real time inflation numbers. Wonder what ever happened to that?
It was showing everyone what the Emperor's clothes really looked like.
you have the gold price, thats a fairly useful working estimate for inflation.
Aldi! bitchez
Trader Joe's, in the Aldi "family" - shopped there for years, starting to see the creeping clawbacks in quality, including "mechanically reclaimed meat" in some of their pre-cooked stuffs (don't eat them, but I watch). . . also of interest is a new scam of 15oz cans with labels that say "net wt. 15oz, DR WT 10oz" - which equates to opening a can and seeing it only 2/3 full - that's with a 10c price hike every 4 months this year. . . most folk aren't noticing yet.
Dollar Tree, bitchez.
First time I went to a Dollar Tree I was shocked how cheap things were. Thank god I don't need to shop there out of necessity but sure is interesting.
What is even more shocking is that the quality of some of the items at the Dollar Tree store is better than the quality of items at Target, Walmart, etc. The quality product stores currently have an item quality problem. You can even find things Made in the USA at Dollar Tree stores.
People are moving down stream. I do the house hold grocery shopping and I do not see any huge savings at Walmart. I think they did a good job of convincing people they were the lowest price out there. Now that times are tougher people are finding out that is not the case.
Fuck Wally-Martinez , H.E.B is the best here in TX, and they buy as much of their shit local as they can,,,
"H.E.B is the best here in TX"
You betcha! The massive H.E.B. in Burleson is worth the extra 30 minute drive because they are doing their level best to put Aldi's, Krogers and WalMart out of business. They regularly have canned goods (Hill Country Fair) priced at 3/$1! Every time I go there I buy a case of each (corn, peas, green beans) for the larder. I wish they sold ammo. That is about the only reason I visit WalMart any more. They pretty much have the lowest prices on .22LR/.22WMR (the only things I cannot reload).
The last time I was at a Wal Mart, I brushed up against some shelving to let, ahem, a somewhat larger patron squeeze by. Unfortunately, there was a huge blob of what appeared to be axle grease that ended up on my shirt. I decided that I was not going to try to save .18 cents at the risk of $30 shirts.
When you consider the size of their clientele you would think they would have bigger aisle. Kind of like driving a Hummer through Europe.
Those $30 shirts are available for $3 at the Salvation Army store.
*nevermind*
Yes, but usually with stains and holes already applied. No thanks.
WallyWorld's 'huge savings" have always been a huge scam - like most retailers, they put their loss leaders in the aisle end caps, or bins down the centre aisles - and then bump up the prices in the periphery.
From the "smiley face Made In America!" campaign to the handouts to new hires on how to apply for food stamps & other benefits subsidising their "policies" - the perfect amrkn corporate business model, sucking the life out of independent mainstreet business, shit the nest, move on. . .
shit the nest, move on
+1
if you told the people all the past months of unpaid mortgage payments were no longer owed if they just started making monthly payments from this point onward........they would still NOT make future payments.......GAME OVER !
Rollback, bitchez.
hahaha
"other retailers" = $ Store
Which is really only a half-step away from taking stuff directly out the back of a truck.
Impromptu markets on the side of the road, set up by illegals are cheap.
Yuppie farmer's markets, not so much.
The free market at its most fundamental, I might add.
Their shoppers are moving up to Tiffany's, LuLuLemon, Coach and Nordstrom's.
Ben's QE123 has worked perfectly.
He is a genius.
The wife says she likes the Bonus Bucks she racks up at K-Mart.
"The wife says she likes the Bonus Bucks she racks up at K-Mart."
Are you old enough to remember S&H Green Stamps? Or even Gold Bond Stamps? Shooooooot, Piggly Wiggly was the place to shop!
I also think it's because their service is getting worse and not better. They seem to be using ever fewer human cashiers leaving longer lines. To me it's noticable. They want you to use the self checkout instead.
+1... the last time I went to a WalMart, all they had open was self-checkout, and they did not have bags (!). You had to BUY the bags from the lone person who was running all the self-checkouts. I said fuckit and walked out with all my stuff and no bags.
You are among the last that will see self-check unless Homeland Security is ramped up in the parkig lot.
Walmart was/is being ROBBED blind by peeps using the self lines and the 80 year old dude that is guarding the line is in on the scam.
They are shutting down those lines everywhere.
The service(bwhhaahahaa) at the regular lines is third worldish. The whole environment in most of the Walmarts we see is toxic. people on the floor hate to be there.
Nice that they let us park the RV in the lot and you can't mess up bottled water,yet anyway.
On the "guest worker front" , yeah the downsize has hit that market here as well.
We have let go and cut back about 30 cash only jobs in the last month and those people and their spending are GONE. Oh and they spent everything they made, everything.
Walmart's store policy is to let people shoplift if the item is not more than $20.
Many ghetto dwellers know this, and take advantage of it.
Grab 20 bucks of stuff and wander on out and see what happens!
Oh, make sure you are in black face so you get the free pass.
bozo.
Just hang out at the conveniently located McDs at the exit and observe.
Educate yourself, or STFU.
http://money.cnn.com/2006/07/13/news/companies/walmart_shoplifters/index.htm
NEW YORK (CNNMoney.com) -- Wal-Mart is moving away from what it called a zero-tolerance policy on prosecuting shoplifters and will now only prosecute anyone caught taking merchandise worth $25 or more, according to a published report.
Ignorant is no way to go through life.
so, you're saying you hang out at McDonald's in WalMart and interview people as to their "ghetto" address, as per your reportage?
no kiddin'
I'm a student of life. I've had all my pc illusions shattered.
Now I just deal with life as it arrives through my -- according to the pc liars -- lying eyes.
"pc illusions/liars"? use a laptop, less sad-face.
I still call bullshit on your "ghetto" commentary - just another made up story to fit prejudices.
"I've had all my pc illusions shattered."
So, now you're a.....Mac?
Hardeeharhar!
Not recently, but I've definitely seen a woman get gang tackled outside the door by both traditional and undercover security forces over a sweatshirt... I'm pretty sure they take any kind of shoplifting seriously... maybe they won't prosecute, etc., but they sure as fuck get their digs back.
I'll second that. I was within five feet of a woman who got taken to the pavement with so much authority, it would have made your avatar proud. I'm not sure what she took, but the six people that came after her were not happy. She was quickly escorted through an inconspicuous door just inside the main entrance, where I presume she was waterboarded and flogged.
The whole thing was over in a matter of seconds. My kids looked up at me with the most serious "WTF?" looks on their faces...all I said was, "That's what happens to you if you steal. Don't forget it."
Sorry, if someone did that to me without so much as a spoken word I would have to see it as a imminent threat to my life, and act accordingly.
pods
Well, bruce leroy, it's gonna be pretty tough to kick some ass at the bottom of a pig pile... dunno if you ever played football, but it's difficult to breathe, let alone mount any majestic ass kicking spree.
Further, it's one thing if a group of people bum rush your house in the middle of the night and don't announce who they are or what they are doing... you have a totally different set of rights and responsibilities when it comes to being in a public place and having stolen items from said place in your possession... If you want to tack on some additional felonies to your criminal record, that's fine, but my suggestion is to take a few to the kidneys and face and sue them later... (but purchase the items you stole at another establishment... you know, for added burn).
Sorry, last place I would be is a pig pile. In order for that to happen one would need to lose their situational awareness in order to be rushed like that. If someone is walking towards me I do not put my head down and shirk it off. I greet them cordially, and I would notice several guys following me in Walmart. It ain't difficult to know what is going on around you.
The last thing I would have in my possession would be a stolen item as well, especially at Walmart.
No criminal record, but that is beside the point. I do not cede my rights when I walk into a public place, and neither should anyone else. If someone who works there wants to inquire about something, fine. If a gang of store thugs try to rush me? Sorry, ain't gonna happen.
pods
I realize that tossing rentacops and geriatric door greeters isn't that difficult, but the way this scenario works is as follows: steal shit, walmart employees start trailing you, you make for the door, on the other side are a couple rentacops waiting for you, you turn around and the other employees have blocked you in...
Yes, if you haven't stolen anything, they don't have a right to do shit... but, if you have stolen something, they can do whatever is reasonable under the circumstances to retrieve their property... the only way they can ensure that this will happen is to prevent you from leaving... (although I've seen some get a mouthful of pavement... close but no cigar). Further, if you've stolen something, you don't get to escalate the situation... so being situationally aware is meaningless unless you're planning on adding felonies to the list of charges or you have some viable means of escape (which you shouldn't if they've got you cornered). All you can do is drop the stolen goods and run... and hope to beat the cops getting there.
If you haven't stolen anything, then I advocate doing everything reasonable to protect yourself... which may very well include testing whether rentacops wear cups or an elbow drop off the cashier table. You don't give up any authority by walking into a public place (well, it certainly doesn't carry the same rights as your abode, but I digress), but you do give up plenty when you're in possession of stolen goods from the very business in which you're phystically present.