Lower-income customers struggling to afford "basic essentials," CEO says
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Lower-income American consumers are feeling stretched as they shop for basic items, according to two leading discount retailers.
Why it matters: Financially distressed individuals are at the greatest risk when the economy begins wobbling.
The big picture: Walmart and Dollar General are raising red flags.
- "Many of our customers report that only have enough money for basic essentials, with some noting that they have had to sacrifice even on the necessities," Dollar General CEO Todd J. Vasos said Thursday on an earnings call.
- Walmart has seen a similar trend. "You can see that the money runs out before the month is gone," CEO Doug McMillon told the Economic Club of Chicago two weeks ago. "You can see that people are buying smaller pack sizes at the end of the month."
Zoom in: Dollar General — which stands to benefit from a rise in the number of budget-conscious customers — exceeded revenue expectations in its most recent quarter reported Thursday.
- Vasos said a rising number of shoppers are trading down to cheaper items in the same category.
Threat level: Nice-to-have items are going by the wayside: Sales fell 4.3% for U.S. convenience stores in the year ended Feb. 23, according to market-research firm Circana cited by WSJ.
- "People can't afford it anymore," sales representative David Guerino told WSJ. "If it's not a necessity, they're not as willing to splurge."
Yes, but: McMillon told the Economic Club of Chicago that consumer health has "been remarkably consistent now for the last 12-plus months"
What to watch: Whether stock market declines and tariff fears spur more consumers to dial back their spending.
