Walmart Economic and Customer Insights Report – Q1 2013

This week Bentonville, Arkansas based Walmart released its Q1 2013 Walmart Economic and Customer Insights Report that features Trends based on sales and survey data – June 2013. The release from the Walmart website reads:

small-business-confidence_130191668237702933_310x243Uneven expectations cause both shoppers and small business owners to look inward for stimulation.
Consumer confidence’s bumpy ride in the first quarter can most be attributed to shoppers’ lack of faith in economic progress and was undoubtedly shaped by perceived Washington gridlock on budgetary issues.

Our survey of both the general population and of Walmart Moms indicates that positive economic expectations were highest in February, following a volatile fourth quarter, and then lowered in both March and April.

Confidence in the government tends to be low, with President Obama’s favorability numbers hovering around 50% and Congressional approval numbers less than 35%. (ShopperDex). Undoubtedly, the on-going fiscal debate in government is a key factor contributing to higher recent levels of consumers indicating that the country has “gone seriously off track.”

While positivity is hard to come by on a macro level, many consumers appear to be attempting to manage items within their personal control.  Despite the recent patchiness in overall confidence both the general population and Walmart Moms are trending higher now than one year ago.

Small business owner economic expectations trended in a similar way to consumers—at the highest level in February and then dropping in March and April.

There is a disconnect between the recent surge in financial markets (the Dow and S&P 500 in particular) and small business attitudes and purchasing.  Sam’s Club buying patterns by small businesses are fairly consistent during this time, an indication that owners see the path to economic resurgence as somewhat obscured?

Despite the lack of assurances coming from the government or the economy, some small business owners appear to be adjusting their models to better function in this uncertain economic period. A few individual business growth diagnostics have shown slight improvement over the past six months, most notably more SBO’s are indicating they are increasing prices and marketing spending.

Shoppers counteract food price sensitivity by leveraging a key Walmart initiative, and fight high gas prices by DIYing.
Some shoppers are exhibiting sensitivity to food prices by claiming to notice increases in some categories at the store and continuing to indicate food costs is a major economic concern.  Walmart’s Healthy Foods Initiative is helping make food healthier, more affordable and available to customers across the country. One key element of the initiative was to save customers on fresh produce, which has been done to the tune of over $2 billon to date.

Springtime gasoline price trends bear close monitoring. In 2010, 2011, and 2012, runs of positive Walmart Mom economic confidence was interrupted by compounding negative factors, most notably a sustained increase in gasoline prices.

Walmart Shoppers appeared to respond to higher winter gasoline prices by seeking DIY “fixes” to help with fuel efficiency. An analysis over the past 5 months shows a direct relationship between the price of regular gasoline and purchases of automotive filters (believed to improve fuel efficiency) at Walmart. This correlation is strongest among younger and lower income households, who are more likely to have larger portions of their discretionary income challenged by higher fuel prices.

A gradually improving job market benefits veterans; happier workers mean key category spending increases can be anticipated.
The April jobs report suggests that the unemployment rate continues to improve incrementally, as the market added 165,000 jobs. The report also included better news for veterans.  Among veterans, the jobless rate in April was significantly lower than the general population (6.2% vs. 7.5%) and almost a full point lower than in April 2012. Walmart is proud to assist veterans’ employment efforts to offer a job to any honorably discharged veteran within his or her first twelve months off active duty.  We project that Walmart will hire and train more than 100,000 veterans over the next five years.

An analysis of a recent study focused on three discrete groups of panelists, their employment situation, and their grocery purchasing behavior:

  • Employed and satisfied with employment
  • Underemployed (feel overqualified or dissatisfied with their hours)
  • Unemployed and looking for employment

The study confirmed that the further the worker moves to the “employed and satisfied” end of the continuum, the more they spend per trip.

These shoppers are also more likely to choose branded products over private label, especially in the dairy and dry grocery categories.  Additionally, they demonstrate a propensity to spend more in the following key grocery categories: seafood, produce, beauty, health & wellness.

q1-2013-trends_130191664338327870_696x634Shoppers look to control what they can, turning toward creative and economical solutions.
Consumers are adjusting to a tighter wallet in the face of tax increases, federal furloughs and concerns over an unstable job market.  For many, this means paying closer attention than ever to stretching their buying dollar and getting the best deals possible.

Shoppers are putting in more time, effort and creativity to save in any ways possible.  Many are taking advantage of free community resources for entertainment, and turning their money-saving DIY projects into family activities.

These dual-purpose deeds prove highly rewarding, as consumers feel smart for putting in the work themselves to simultaneously improve their lifestyle and better their financial situation.  According to our internal survey data, 89% of adults indicate they are involved in more household “conservation activities” than three years ago in an effort to save on household spending.  Top activities shoppers claim engagement in:

  1. Cooking at home (56%)
  2. Using coupons for everyday purchases (48%)
  3. Seeking out lower priced food items (46%)

The spirit of thriftiness has led consumers to rely increasingly on used items, and has created a booming aftermarket for secondary-use products in the last few years.

While the portion of shoppers who go to thrift stores hasn’t changed recently, what’s new is their willingness to talk about being thrifty and openness to share new ideas with others.  An internal survey indicates that most consumers agree that it is “acceptable to buy gently used items,” almost equaling the amount who “take pride in finding good bargains.”

Rather than becoming burdensome, these frugal behaviors are energizing consumers and giving them a renewed sense of resolve, rejuvenation, and self-empowerment as spring approaches.

This trend is expressed in both the retail environment and the informal “sharing economy,” springing up amid hand-me-downs, yard sales, barters, community toy sharing programs and donation networks.

Did You Know?
Over the past two years, consumers have made Walmart a destination for TV series on video purchases, especially during the first quarter – at the time of spring season premiers and leading into sweeps season.

Interest in key cable television programming is well represented among Walmart’s top-selling Q1TV series videos.

TV SeriesViewers (MM)*Walmart Q1 Rank
Game of Thrones (Season 2)23.6#1
Duck Dynasty (Season 1/2)184.7#2/#3
The Bible56.8#6
Walking Dead (Season 1/2)104.1#9/#7

*All airings, week of 2/10-week of 4/28

This years’ Academy Awards ceremony drew higher Nielsen ratings compared to the previous two years. This enthusiasm for video entertainment is reflected in Walmart shoppers’ combined Blu-ray and DVD purchases in the first quarter, which were focused on the top box office video releases.

FilmBox Office $MMWalmart Q1 Rank*
Twilight Saga: Breaking Dawn Pt. 2$292.3#1
Hobbit: An Unexpected Journey$302.8#2
Skyfall$304.4#3

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Christopher Durham is the president of My Private Brand and the co-founder of The Vertex Awards. He is a strategist, author, consultant and retailer who built brands at Delhaize-owned Food Lion, and lead strategy and brand development for Lowe’s Home Improvement. He has consulted with retailers around the world on their private brand portfolios including: Family Dollar, Petco, Staples, Office Depot, Best Buy, Metro (Canada), TLW (Taiwan) and Hola (Taiwan). Durham has published five definitive books on private brands, including his first book, Fifty2: The My Private Brand Project. In 2017, he will debut his newest book, Vanguard: Vintage Originals, a visual tour of innovation and disruption in private brand going back to the mid-1800’s. Dynamic in his presentation while down to earth and frank in his opinions, he has presented at numerous conferences, including FUSE, The Dieline Conference, Packaging that Sells, Omnishopper and PLMA’a annual trade show in Chicago. Durham lives in Charlotte, NC with his wife, Laraine, and two daughters, Olivia and Sarah.