Walmart CEO Confirms Payday Timing Effect
A surprising commentary by Walmart CEO Mike Duke reinforced the theory that less affluent consumers operate on a payday-based buying cycle (see When Are Consumers Most Receptive). According to Duke, “Purchases are really dropping off by the end of the month even more than last year.” Walmart shoppers often are paid at the beginning of the month and stock up on goods then.
Duke thinks that high gas prices are exacerbating the monthly cycle by depleting consumer cash more quickly. By the end of the month, many are tapped out.
It isn’t just retail stores that need to think about this cycle. Direct mail, email, and Web offers geared to a less well-off demographic will almost certainly be impacted by monthly variations in consumer willingness to spend. Even consumers who make such purchases with a credit card or who may not be totally out of cash may respond at a lower rate if they feel less affluent late in their pay cycle. The more upscale your customers are, the less likely it is that you’ll see a payday effect. Even those customers that are being stressed financially are likely to have timing buffers like credit cards that will mute the pay cycle. But if your target demographic is more like Walmart’s than Tiffany’s, offers that are viewed shortly after payday will likely perform better.