Wednesday, February 23, 2011

Changing Behavior

I think I've mentioned that recessions as deep and long as the one we experienced can have lasting effects on behavior. These changes might very well be temporary, but some might be more permanent for this age cohort. From the NYT on Walmart:

Company executives and analysts said consumers seemed to have changed their ways during the recession, and that has persisted into the sluggish recovery. New shopping habits, like using less credit, relying more on month-to-month cash and buying in smaller packages, have hampered Wal-Mart’s ability to climb out of the sales slump.
In the fourth quarter of 2010, the problems stemmed from several areas. Toy sales were down in American stores, though Wal-Mart had aggressively promoted prices and added back toys to its aisles. Apparel continued to be a problem.

And in consumables — basics like toilet paper and soap — Wal-Mart said its prices and sizes were a problem for shoppers who continued to be on tight budgets.
“It’s not a case that we’re not correctly priced,” Mr. Holley said. For example, he said Wal-Mart’s price-per-ounce for laundry detergent was usually lower than competitors’, but competitors like dollar stores often sold smaller bottles or boxes that were cheaper.

“Some of our customers at the end of the month may have only a fixed amount left,” he said, “and even if it’s more per ounce, if the price point is more attractive at a competitor, at the end of the month that’s all they can spend.”
It seems to be a liquidity/financing problem for their customers.

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