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Tuesday, September 21, 2010

Why would somebody buy baby formula at midnight?

Bill Simon, the head of Wal-Mart's U.S. operations, answered this question in a talk last week.

And you need not go further than one of our stores on midnight at the end of the month. And it's real interesting to watch, about 11 p.m., customers start to come in and shop, fill their grocery basket with basic items, baby formula, milk, bread, eggs, and continue to shop and mill about the store until midnight, when ... government electronic benefits cards get activated and then the checkout starts and occurs. And our sales for those first few hours on the first of the month are substantially and significantly higher.

And if you really think about it, the only reason somebody gets out in the middle of the night and buys baby formula is that they need it, and they've been waiting for it. Otherwise, we are open 24 hours — come at 5 a.m., come at 7 a.m., come at 10 a.m. But if you are there at midnight, you are there for a reason.

What Wal-Mart calls the "paycheck cycle" has recently been "extreme," Simon said, with lots of shoppers at the beginning of the month and fewer at the end.

Wal-Mart is also seeing an "ever-increasing amount of transactions being paid for with government assistance," he said.

This is what a rising poverty rate looks like.

Here's the full transcript of Simon's talk, which he gave at last week's Goldman Sachs Retail Conference.

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