Wal-Mart report shows middle America is still reluctant to spend
Although Wal-Mart's bottom line benefited from an extra $100 million, a 2% increase from the second quarter last year, most of that profit came from stores outside the U.S. More than half of Wal-Mart's expansion was done beyond our borders too, largely in developing countries like China and Mexico, places that are recovering from the global recession a lot quicker than the U.S. or Europe.
"The slow economic recovery will continue to affect our customers, and we expect they will remain cautious about spending," said Mike Duke, president and CEO of Wal-Mart. "Our international business continues to be an impressive growth engine."
But not here, where same-store sales, a measure of a retailer's health, actually declined 1.4% for the quarter. That's the fifth consecutive quarter that figure has gone down.
Wal-Mart's customer base -- which is most of the U.S. -- is largely middle to lower income, the very people that are still unemployed, underemployed and/or underwater in their mortgages, or worse. For a brief period last year, upper-income shoppers were thought to be "trading down" and shopping at discount stores. But that's no longer true, as the truly rich have returned to their old habits and their spending has been steadily increasing in the past few months. They're just not shopping at Wal-Mart.
And as Derek Thompson succinctly points out in The Atlantic, "We Are All Wal-Mart." For most of us, the recovery is something we're just reading about and the prospect of a double dip recession seems silly, only because it feels like the first one never ended. We are shopping -- at Wal-Mart or similar discount stores -- because that's where we get basic necessities, but that's all we're buying. Discretionary spending is still a thing of the past. At least for shoppers like Wal-Mart's.