Walmart Just Revealed How Poor US Shoppers Are







Walmart is no stranger to sensational headlines, but there’s at least one story this week that is just begging to be taken apart. Anyone who thinks “Walmart Just Revealed How Poor Its Customers Are” is an accurate reflection of the facts, needs to keep reading.
     Because the problem isn’t that Walmart revealed how poor its customers really are, it’s that Walmart revealed how poor U.S. shoppers really are.




     The hook here, the news peg, is that Walmart released its annual report and in it, there’s a specific paragraph that states:


Our business operations are subject to numerous risks, factors and uncertainties, domestically and internationally, which are outside our control … These factors include … changes in the amount of payments made under the Supplement[al] Nutrition Assistance Plan and other public assistance plans, changes in the eligibility requirements of public assistance plans, …


The implications are that Walmart preys on poor people, that the retailer has somehow created poor people by paying low wages. That it relies on government assistance in a way that goes beyond accepting payment from shoppers via government programs. According to Business Insider:



Walmart, for the first time in its annual reports, acknowledges that taxpayer-funded social assistance programs are a significant factor in its revenue and profits. This makes sense, considering that Walmart caters to low-income consumers. But what’s news here is that the company now considers the level of social entitlements given to low-income working and unemployed Americans important enough to underscore it in its cautionary statement.


Not quite.
     It’s not the first time Walmart noted that a reduction in the Supplemental Nutrition Assistance Program (SNAP) would hurt business. It may have been the first time that was mentioned in an annual report, but that’s because the reduction took effect during the fiscal year in question.
     In November, benefits for a family of four were be reduced by $36 a month. Benefits had been increased as part of the Recovery Act in 2009, but Congress allowed the increase to expire on Nov. 1.
     An estimated 48 million Americans benefit from SNAP while roughly 80 percent of U.S. consumers shop at Walmart at some point during the year.
    
     Not all of them use SNAP, but the majority have some kind of budgetary constraint and it’s a number that keeps growing. Ten years ago, roughly 50% of Walmart shoppers cited low prices as the most important reason to shop at Walmart, today that number is 75%, said Andy Murray, Walmart senior vice president creative, speaking at the Shopper Marketing Summit this week.
     Walmart shoppers are particularly sensitive to fluctuations in the price of gas, to small tax increases or to anything that adds another $20 burden to a household in any given week. Budgets are tight and getting tighter all the time, in spite of a slowly recovering economy.
     Walmart is hardly the only retailer to be effected by a reduction in SNAP benefits, or to say so in financial documents. The dollar store segment is also vulnerable. Roughly $4 billion in SNAP benefits was vaporized, money that was once spent at U.S. stores, not just Walmart. This was bad news for shoppers and retailers, across multiple channels.
     As one grocery executive said on an online retail forum regarding the issue, “This cut hurts all of our sales, not just Walmart, let me make that clear. The struggle is universal for retailers, and sales are down around 8-10% since the first of the year.”
     I’m not a fan of criticizing other reporters or publications, but these headlines are designed to get clicks, to be shared, to fan the flames of outrage. In this case, it’s a false and very misplaced outrage.
     Walmart didn’t just reveal how poor its customers really are, it revealed just how poor so many U.S. shoppers are.