Wal-Mart's Scott Says Recession Remaking Consumers

(MoneyWatch)  Speaking at the National Retail Federation convention in New York today, Lee Scott, outgoing Wal-Mart ceo, said the current recession is fundamentally changing consumers in the United States. Among his comments about the state of retailing and the economy, Scott said younger consumers particularly are becoming more focused in their spending, less anxious to use credit and increasingly interested in protecting money. While many people are currently cutting back on their spending to pay down mortgage or credit card debt, Scott said younger consumers are doing so not because they necessarily must but as a choice. Having been bombarded by gimmicky mortgage rates and credit card offers since childhood, they are wary of debt and have no faith that any market, bond, stock or housing, will continue to grow indefinitely and pay off tomorrow what is borrowed today. They even are giving up simple pleasures such as movies and restaurant meals to conserve cash. To explore the phenomenon, Scott said he had talked with younger Wal-Mart headquarters employees and found a fundamental change in their attitudes as consumers. "Every one had given up something and felt good about it," he said.

However, Scott said consumers are willing to spend money on those things they want most. Some big-ticket items Wal-Mart offers continue to sell well. He warned, though, that when retailers miss the right combination of features and price today, sales drop off dramatically. In response, retailers need to concentrate even harder on consumer research, and not just for the duration of the economic downturn. As with the generation that survived the Great Depression, the economy is training consumers to hold on to their dollars until just the right deal comes along.