Wal-Mart understands the recession, and CEO Bill Simon explains the impacts of the recession on the ‘average Joe’ perhaps better than anyone. With brutal honesty, he recently gave a presentation at a Goldman Sachs conference which sums up the challenges that the growing number of unemployed folks face today.
Here I quote directly from a recent article in the WSJ titled ‘Underwear Economics‘.
“The Wal-Mart customer is a bit of a microcosm of the U.S. economy… You need not go further than one of our stores on midnight at the end of the month… It’s real interesting to watch. About 11 p.m., customers start to come in and shop, fill their grocery basket with basic items, baby formula, milk, bread, eggs, and continue to shop and mill about the store until midnight, when…government electronic benefits cards get activated and then the checkout starts… The only reason somebody gets out in the middle of the night and buys baby formula is that they need it… We are open 24 hours…. If you are there at midnight, you are there for a reason.”
And I bet it ain’t Christmas shopping for underwear.
BTW, Mr. Simon also said, “It is our responsibility to figure out how to sell in that environment… and to figure out how to deal with…an ever-increasing amount of transactions being paid for with government assistance.”
And this brings me to a point I recently made in response to a comment on another seventh fold post. While welfare checks are made out to the poor, the poor are not the real recipients. These government handouts move quickly up the socio-economic chain through immediate purchases. Through Mr. Simon’s comments we see just how little time these ‘handouts’ remain in the recipients’ bank accounts.
But what really gets me going is the utter lack of compassion that is shown. Mr. Simon is not concerned that his customer base is suffering… that the infant children of his customers are literally going hungry. Instead he is motivated by the challenge of figuring out package sizing and the efficiency of the electronic funds transfer process so that he can quickly appropriate the government handout.
Meanwhile the Golden Men are figuring out how to make money off the transactions themselves! At least Wal-Mart is supplying the baby formula, which makes them one step removed from the guys over at Goldman.
Is this the kind of world that we have to look forward to in times of resource scarcity? I hope not, but if we don’t work to change things, this is exactly the world we’re going to get.
As always, thanks for reading.