Americans living paycheck to paycheck are looking at the gas gauge before they run their errands, and that’s hurting big retail chains such as Wal-Mart Stores Inc. and Lowe’s Cos.
“Our customers are consolidating trips due to higher gas prices,” said Wal-Mart U.S. headBill Simon during the retailer’s earnings conference call Tuesday. “One in five Wal-Mart moms list gasoline as a top expense behind housing and car payments.”
Reflecting those concerns about the cost of driving, customer visits to Wal-Mart are down—and that’s hurting sales. Wal-Mart on Tuesday reported its eighth consecutive quarter of sales declines at U.S. stores open at least a year.
“Despite improvements in some areas of the economy, core Wal-Mart U.S. customers are still stretched,” Wal-Mart Chief Executive Mike Duke said. “They remain concerned about rising prices for gas, energy and food, as well as employment issues.”
Store chains and retail experts say the prices are having a broad emotional impact that is altering shopping patterns even for those who can afford to fuel up, a shift that’s benefiting online retailers.
Lowe’s said it sees a shift due to gasoline prices. “We do believe it has affected traffic going to stores. And some people are staying home and ordering more” online, Lowe’s Chief ExecutiveRobert Niblock said in an interview.
In the U.S., online sales in April jumped 19% compared to the year before, according to a research arm of MasterCard Inc. that measures U.S. retail activity based on credit card and other transactions. “It is really the gasoline story,” said Michael McNamara, vice president of research for MasterCard Advisors SpendingPulse. “We are seeing fewer trips to retail locations, and a benefit to online sales.”
The price of gas has remained close to $4 a gallon in May. The national average was $3.94 Tuesday morning, according to the automotive group AAA, up substantially from $2.87 a year ago.
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