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.
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.