Down and Out in Discount America

2007-02-14T05:20:00.000-08:00

On the day after Thanksgiving, the biggest shopping day of the year, Wal-Mart's many progressive critics--not to mention its business competitors--finally enjoyed a bit of schadenfreude when the retailer had to admit to "disappointing" sales. The problem was quickly revealed: Wal-Mart hadn't been discounting aggressively enough. Without low prices, Wal-Mart just isn't Wal-Mart.

That's not a mistake the big-box behemoth is likely to make again. Wal-Mart knows its customers, and it knows how badly they need the discounts. Like Wal-Mart's workers, its customers are overwhelmingly female, and struggling to make ends meet. Betty Dukes, the lead plaintiff in Dukes v. Wal-Mart, the landmark sex-discrimination case against the company, points out that Wal-Mart takes out ads in her local paper the same day the community's poorest citizens collect their welfare checks. "They are promoting themselves to low-income people," she says. "That's who they lure. They don't lure the rich.... They understand the economy of America. They know the haves and have-nots. They don't put Wal-Mart in Piedmonts. They don't put Wal-Mart in those high-end parts of the community. They plant themselves right in the middle of Poorville."

Betty Dukes is right. A 2000 study by Andrew Franklin, then an economist at the University of Connecticut, showed that Wal-Mart operated primarily in poor and working-class communities, finding, in the bone-dry language of his discipline, "a significant negative relationship between median household income and Wal-Mart's presence in the market." Although fancy retailers noted with chagrin during the 2001 recession that absolutely everybody shops at Wal-Mart--"Even people with $100,000 incomes now shop at Wal-Mart," a PR flack for one upscale mall fumed--the Bloomingdale's set is not the discounter's primary market, and probably never will be. Only 6 percent of Wal-Mart shoppers have annual family incomes of more than $100,000. A 2003 study found that 23 percent of Wal-Mart Supercenter customers live on incomes of less than $25,000 a year. More than 20 percent of Wal-Mart shoppers have no bank account, long considered a sign of dire poverty. And while almost half of Wal-Mart Supercenter customers are blue-collar workers and their families, 20 percent are unemployed or elderly.

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