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Wal-Mart: Consumers Have Shifted Fundamentally To Frugality

This article was written by in Frugality. 11 comments.


When Wal-Mart announced that it will be lowering its expectations for the year, the CEO believes that this country is experiencing a “fundamental shift in spending,” in which consumers have adopted frugality as a way of life.

There is no fundamental shift. Any widespread frugality we are currently experiencing in the United States is temporary. For better or worse, unfettered consumerism drives the economy. Once the economy begins to improve, people will find new jobs, head back into the stores and car dealerships to buy products they don’t need, buy real estate looking to sell it to someone else later for a higher price, and take vacations. This “fundamental shift” is nothing more than a blip, at least so far.

It’s too early to say whether we’re due for a prolonged recession. But even five years isn’t enough to signify a philosophic adjustment. It would take a generation before we can say that we’re experiencing a fundamental shift in consumerist behavior. We won’t know whether frugality is the norm until the children of today’s shoppers inherit a new approach. Wal-Mart must like the way the idea sounds, however, because the company does want a shift. Rather than blaming the company for low profits, they want analysts to blame the economy.

If there were a fundamental shift towards frugality, Wal-Mart and every other company would have to adjust their marketing strategies to be appropriate in this supposed new era of conscious consumerism. That would require more than just advertising campaign emphasizing the ability to save money through shopping, it would change the way retailers do business. It’s more likely to see Wal-Mart ride out the turbulent times and just wait for consumers to get through their temporary frugal phase.

Reuters

Updated September 8, 2011 and originally published January 13, 2009. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 11 comments… read them below or add one }

avatar Chris

Of course, it’s temporary. So was the housing bubble, and the dot-com bubble, and everything else, too. Just say it’s cyclical, why don’t you?

Besides, pollingreport.com/consumer.htm has listed quite a few indicators, such as the CCI and the MSCI, that say that consumers in general are much less than optimistic about current and future conditions.

I doubt what you’re looking for will be found, anyway. You don’t market to people to not spend money. You market to spenders. Thus, marketing probably won’t change significantly, anyway. I can see it now: Super Bowl ads for private label groceries. Not gonna happen.

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avatar Craig

@flexo Americans love to shop, that’s a fact. Once the economy improves, I agree I think you will see more spending. I disagree in how you think companies have not adjusted. Of course they have. Layoffs are one indication they are adjusting, as well as if you look at the numbers, marketing budgets are decreased and focused on different areas to gain visitors. I think the economy is forcing everyone to adjust somehow.

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avatar Luke Landes ♦127,371 (Platinum)

I agree that there have been adjustments, temporary adjustments. When companies can, they will re-hire. I disagree with Wal-Mart. There has been no fundamental change in consumer thinking, just a temporary change. Similarly, there not been a fundamental change in the way businesses approach sales and marketing, just a temporary change. For consumer thinking, we’ll need 20 years or so to see if values are changing.

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avatar Craig

I agree with that, it would take almost a generation to really determine if views and consumer thinking have changed. I’m curious to how would you base this. Say 20 yrs comes, what in your mind determines if things have changed with consumer thinking?

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avatar Manshu

Temporary or not – only time will tell. Probably we will see a little less spending in the years and decades to come.

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avatar thomas

I must be really frugal – I avoid Wallyworld at all costs.

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avatar Shawn

I do a great deal of shopping at Walmart/Sam Club and consider myself frugal. I do believe that the shift is temporary. A lot of people feel broke right now and really just want good deals, which is what deep discount stores often provide.

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avatar Kevin

I agree that it isn’t permanent. We’re a spending economy. I thought I read something recently that said SUV sales were up because of low gas prices.

So not only is it temporary, we also can’t see past five minutes in front of us. Gas prices are going to go up.

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avatar SimplyForties

I would think a shift toward the frugal would help Walmart, not hurt it. Clearly, not spending at all hurts retailers but I would think Walmart would pick up shoppers during tough times, not lose them.

I do agree that it is much too soon to say that we’ve undergone a fundamental shift towards frugality. We won’t know that until we see how everyone acts when the economy picks back up again.

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avatar J.D.

Interesting. I hadn’t seen this article. And I’m not sure that I agree with it. I’m actually a little puzzled by the current economy. I understand that the statistics demonstrate that we are, in fact, in a recession. I’ve lost money in my retirement accounts. I know some people who have lost their jobs. But I don’t actually know many of my friends who have altered their lifestyles. The spendthrifts are still spendthrifts. The frugal are still frugal. I wonder what other people are experiencing in the day-to-day…

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avatar Eden

Great analysis. I agree. Wal-Mart is of course just trying to spin things to benefit it…as would any good marketing department. If Wal-Mart is really ready for a new era of frugality I guess we can expect stores to throw out all of the expensive electronics, toys, games, and just focus on selling inexpensive, high quality food and clothing, right? That’s all we really ‘need’.

On the other hand, personally I’ve shifted my life to one of much greater frugality. However, that came about before the financial meltdown and I’m doing it to get out of debt and get my life under control. Not because I’m worried about what’s on the news tonight.

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