Watching Us Save, One Cart At A Time

It's 9:20 a.m. inside a Wal-Mart supercenter just north of Denver, and three-dozen employees are gathered in the back of the electronics department. Their boss, Karisa Sprague, steps to the center of the huddle. "GOOD MORNING, KARISA," they thunder, then stamp their feet twice, clap their hands twice and shout: "TEAMWORK, HUH!" Sprague congratulates an employee named Crystal on her 10th anniversary with the company, and offers a quick pep talk. Then the employees stretch: touching toes, bending elbows, rotating wrists. It's an odd daily ritual, but in a way it makes sense. While much of America's retail landscape sits idle during this recession, these workers have a reason to warm up: even as Americans cut spending, business at Wal-Mart has never been better.

That gives Wal-Mart managers like Sprague a unique opportunity. For her, peering into shopping carts is like reading economic tea leaves, yielding anecdotal measures of consumer confidence and a front-line view of precisely how consumers are reining in expenses. Wal-Mart managers are often the first people to sense a recession is coming because they'll notice an increase in items discarded near cash registers, a signal that anxious shoppers are reconsidering purchases. In her store, Sprague has seen another barometer of spending discipline: an increase in the number of shoppers carrying grocery lists, many of which get dropped along the aisles. "Yesterday I picked up four of them," she says while walking toward the meat department.

Sprague, 29, has managed this location in Westminster, Colo., a Denver suburb in the foothills of the Rockies, since it opened in late 2006. At 203,000 square feet—that's more than four acres—this outlet is large even by Wal-Mart standards and employs 425 people. For Sprague, who worked her way up from assistant manager after joining Wal-Mart's management-trainee program right out of college, this job has been a key stepping stone: her boss says within months she's likely to become a market manager, overseeing a dozen stores. Until then, she'll continue her 6 a.m. to 6 p.m. workdays at this location, trying to make good on Wal-Mart's ad slogan: to help customers "Save Money" and "Live Better."

That mission starts in the grocery aisle, with offerings like 16-inch "take and bake" pizzas selling for $8.98—part of the fast-growing category of prepared meals. "It's for customers who may have gone out to eat more in the past, but now they're bringing it home" to cut costs, Sprague says. For shoppers who do cook, there are some unsurprising examples of what economists call "substitute goods," like the giant packs of ground beef that are now selling briskly while nearby shelves of Angus steaks languish. (Most of the decisions about what to carry come from headquarters, but Sprague has discretion to give items more or less shelf space, and to work with local suppliers to bring in special items.) Sales of frozen vegetables have picked up, too, because tight-fisted shoppers won't take the risk that fresh food will spoil. In the dairy aisle, Sprague picks up a $2.27 can of Great Value Whipped Cream and holds it next to a $3.27 can of Reddi-wip. Across the store, generics are selling strongly, she says—so much so that in March, Wal-Mart announced big investments to redesign and expand its Great Value line.

Some of the ways shoppers are cutting back aren't necessarily wise. As Sprague cruises the aisles, she spies a woman with only toilet paper and milk in her cart. It's a common sight: to minimize spending, many shoppers are hitting the store multiple times a week but buying fewer items on each trip. "They aren't buying to stock up—they're buying what they need today," says Don Frieson, a Wal-Mart senior VP. Those customers may feel good exiting the store with change in their pockets, but it's a short-sighted strategy, says Tod Marks, a senior project editor at Consumer Reports. "You're spending a lot more time, a lot more gasoline, and chances are that each time you go to the store, you're going to pick up some impulse items."

Beyond the grocery aisles, what's surprising is how many discretionary items continue to sell briskly. TV sales are still strong, fueled in part by the conversion from analog to digital signals. While adult apparel has dropped sharply, moms are still buying kids' clothing. As people seek cheap ways to entertain, lower-end patio sets and barbecue grills are selling well. Sprague admits she's puzzled by some of the store's hot recession sellers, like $5 white toilet seats. "It seems bizarre," she says, "but I can't keep them in stock." Her best guess: unemployment and cocooning are leading people to put more wear on their home bathrooms, and they're choosing her $5 seats over pricier ones at Home Depot.