Published on: March 11, 2016by Kevin Coupe
There's a Fortune piece this morning that makes fast - and parenthetical - reference to something that I think is going to be an enormous economic factor in coming years...
Fortune reports that even as Walmart struggles to improve its stores, expand its e-commerce offerings and pay its employees more even if it hurts short-term profits, the company "is making progress on a key challenge for all stores now: winning young adults just starting their careers and families, otherwise known as 'millennials'."
The reason some two-third of US millennials shopped at Walmart in the last month? Chief Merchant Steve Bratspies says that it is "because at their stage in life, they need bargains as they spend on diapers, then kids’ clothes, and save money to start making mortgage payments (or pay off student debt.) Bratspies said internal research showed Walmart’s market share rose 4.5% percentage points among mothers in this age group over the last two years."
Or pay off student debt.
Those are words not to be taken lightly if you are in the business of selling people stuff, and depend on the availability of discretionary income.
Fortune had another story the other day pointing out that "more than 40 million Americans have some type of student debt, totaling more than $1.3 trillion in the U.S. And the most recent class of 2015 is the most indebted so far with an average of $35,000 in student debt."
This debt load creates a lot of different responses. In some geographic areas - like Kansas - governmental officials are creating "opportunity zones" where they will offer tax breaks and even financial incentives in order to get people to settle there. In others, the response can be a little more dramatic - the New York Daily News reported recently that in Houston, Texas, seven US Marshals arrested a man who had not paid a $1500 student loan from 1987. (Admittedly, this may be an outlier.)
But I think that the extent of student debt out there, and the crushing impact it may have on young people's ability to buy homes, take vacations, invest in the stock market, have children ... well, it could be enormous. And I think that retailers have to start factoring that into their plans and strategies. It will be an enormous challenge, but also might be an enormous opportunity.
And an Eye-Opener.
- KC's View: