Walmart, Other Retailers Feeling the Impact of Government Shutdown

Even though Congress ended the government shutdown on Wednesday, October 16, Walmart (NYSE: WMT) and other major retail chains are already feeling its impact on sales and on shopper attitudes.

"It should come as no surprise that the government shutdown is on the minds of our U.S. customers. As you would expect, we're following the situation very closely," Walmart CEO and president Mike Duke told analysts at an investor conference this week, USA Today reported.

After more than two weeks of the shutdown, retailers have seen a downward shift in consumer spending habits. In fact, 40 percent of consumers have scaled back spending as a result of the shutdown, according to a new survey conducted by ORC International for the International Council of Shopping Centers and Goldman Sachs.

The survey, which was conducted between Oct. 10 and Oct. 13, found that lower-income households (annual incomes of $35,000 or less) are much more likely to be scaling back on purchases compared to high-end households. Cutbacks by lower income households not only impact Walmart, but also a number of grocery stores, restaurants, dollar stores, and other retailers.

In addition, 29 percent of shoppers said the political gridlock in Washington would affect their holiday spending, according to the National Retail Federation. The NRF's holiday consumer spending survey, conducted by Prosper Insights & Analytics, also found that nearly one-third of consumers between the ages of 55 and 64 said the shutdown was "somewhat or very likely" to impact their spending, the highest percent among all age groups surveyed. 

"Americans deserve to feel good about spending their hard-earned money on gifts for others; and, this holiday season, it's evident some could second-guess their spending," NRF President and CEO Matthew Shay, said in an NRF statement. "We expect consumers to set a modest budget for gifts and other holiday related purchases as they wait and see what will become of the U.S. economy in the coming months," he added.

Walmart executives are also concerned about how a cutback in customers' spending will impact the chain's holiday sales. "Of course, the holidays are right around the corner, raising the stakes even further on serving customers and delivering on performance," Duke said.

For more, see:
This USA Today article
This article
This NRF statement

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