Plus: California Gov. Newsom signals he’s serious about protecting workers from AI; the messages boosting brand reputation.
Walmart stock tumbled amid fresh concerns that American shoppers are at the end of their rope.
The company recently reported sales growth, but noted the increase was driven by low-price private label goods and higher-income households looking for ways to stretch their budgets.
“When I look at the consumer, especially here in the U.S., they’re telling us they’re feeling some pressure, and they’re looking to Walmart for value,” John Furner, Walmart’s CEO, told analysts during an earnings call this week.
A day prior, Target’s Chief Financial Officer expressed a similar outlook: “While consumers have proven to be resilient so far, sentiment has been declining recently and we’re keeping a close eye on their spending behavior.”
Earlier this month, Kraft Heinz CEO Steve Cahillane described the situation in no uncertain terms: “They’re literally running out of money at the end of the month.”
These signs of worry come after U.S. consumer prices jumped 3.8% in April, the biggest increase in nearly three years. Credit card balances, meanwhile, now sit near a record high of $1.25 trillion, according to the Federal Reserve Bank of New York’s latest quarterly study of household debt.
And now, the University of Michigan reports consumer sentiment has hit a record low, following from an index score of 49.8 in April to 44.8 in May.
“The cost of living continues to be a first-order concern, with 57% of consumers spontaneously mentioning that high prices were eroding their personal finances, up from 50% last month,” Joanne Hsu, director of the university’s ongoing survey of U.S. shoppers, said in a statement. “Lower-income consumers and those without college degrees posted particularly strong sentiment declines.”
Why it matters: Consumers are financially exhausted.
At this moment, it’s wise for communicators to focus on empathy, rather than aspiration. Right now, the only aspiration shoppers have is to get their bills paid at the end of the month.
In this environment, emphasizing value works. Companies should frame the goods and services they offer as a way to help families get by. Consumers aren’t just price-sensitive right now; they’re looking for reassurance that they’re making smart decisions.
Messaging that focuses on luxury products and premium experiences will become increasingly tone deaf to a growing segment of the population in the coming weeks and months.
And make sure to position everything as honest, authentic help, not a strategy to move more units to generate more revenue. No one wants to feel taken advantage of in times like these.
Editor’s Top Reads:
- The latest Axios Harris Poll 100, which asks U.S. adults to rank companies by reputation, puts Chewy in first place, followed by Toyota and Samsung. Deeper analysis from The Harris Poll notes that amid rising gas prices and concerns about affordability, “companies with the strongest reputations are the ones Americans feel are helping them get ahead.” And much of this feeling, of course, arises from how brands communicate with consumers. Are they addressing current fears and worries or pretending everything is business as usual, when clearly for many shoppers it’s not?
- California Governor Gavin Newsom signed an executive order meant to protect workers from potential mass layoffs caused by AI. Considered the first of its kind in the nation, the order directs state agencies to expand job training programs and explore new labor policies, among other mandates, to get ahead of workforce disruptions many experts anticipate. “California has never sat back and watched as the future happened to us — and we won’t start now,” Newsom said in a statement. “We have taken the lead on advancing innovation, safety and transparency. But we must think bigger. This moment demands that we reimagine the entire system — how we work, how we govern, how we prepare people for the future — and that work is starting right here in the Golden State.” This is a clear sign: governments expect AI to impact jobs in a profound way. No one quite knows what that looks like now, but the most populous state in the union is getting ready for that likelihood. From a communications standpoint, this is another warning sign that the use of AI is no longer seen as a fun, shiny toy: it’s a threat to people’s livelihoods. Be prepared with your messaging about AI use, job protection and pivots to the future. And be on the lookout for a potential Newsom 2028 presidential run as he seeks to take a bigger role on the national stage.
- A California judge ruled that the Jewish nonprofit organization Kars4Kids, which encourages people to donate cars, boats and real estate, must stop broadcasting its catchy jingle in ads across the state, NBC News reports. The reason: the group violated California’s false advertising and unfair competition laws for not disclosing that some of the money goes toward funding trips to Israel for older teenagers. “Money cannot ‘un-donate’ a car or restore the donor’s belief that they were helping a local, needy child,” the ruling said. “The evidence also shows that children, especially needy or underprivileged children, are not the recipients of the proceeds of the donations.” The incident highlights the importance of embracing transparency when communicating with the public, especially at a time when the public holds a skeptical view of what charities do and who they benefit. While the judge noted Kars4Kids can return to the airwaves if its ad includes “an explicit and audible disclosure of the organization’s religious affiliation,” the nonprofit’s credibility with consumers could take some time to rebound.
Paul Hiebert is a reporter for PR Daily and Ragan Communications. Follow him on LinkedIn.
The post The Scoop: Companies sound the alarm as consumer sentiment plunges to new low appeared first on PR Daily.
