The End of Consumerism?

2009-01-13 | 09:41

Wal-Mart CEO sees a fundamental shift in U.S. economy.

Is a fundamental change taking place in the U.S. economy? Yes, if you believe H. Lee Scott, chief executive officer of Wal-Mart Stores, Inc. Speaking for the last time as CEO of Wal-Mart at the National Retail Federation’s 98th annual convention, Mr. Scott predicted the first half of 2009 will be “extraordinarily challenging. In the second half you’ll have a rough spot against the stimulus package. It will be moderately better next year. I don’t see anything that says it will turn around swiftly.”

The economy will turn around some day—but don’t expect conspicuous consumption to make a comeback, he insisted.

Although Wal-Mart was one of the few bright spots during the holiday selling season, Mr. Scott said that some of the big issues—47 million uninsured Americans, U.S. dependency on foreign oil, a decline in education system—are problems that must be addressed in order for the U.S. to the ship.

Still, he admitted that consumers have the money, just not the will to spend it. For example, Wal-Mart posted a 25% increase in the sale of flat-panel TVs during the holidays, but Mr. Scott said that consumers won’t spend the money on just anything; as a result, retailers must do a better job of understanding consumer behavior and their own inventories.

Another speaker at the NRF convention, Stacy Janiak, Deloitte’s vice chairman, national retail leader, told the audience that consumer spending in the U.S. will not return to former levels. Instead, the economy will be driven by an increase in government spending.