Why might Wal-Mart, the world’s largest retailer, be feeling so much pain from the downturn in the U.S. housing market?
 
Here is one consultant’s thoughts:
 
“Wal-Mart is in many ways the Ellis Island of American retailing,” said Craig Johnson, president of retail consulting firm Customer Growth Partners, in an interview. He said that often, new immigrants go to Wal-Mart in the United States because the retailer, which has extensive operations in Mexico, is familiar.

“Very heavily, the new immigrants come to shop (at Wal-Mart) because they’ve heard the name,” he said.
The  problem is that many of these recent immigrants operate heavily in a cash economy, he said, and they disproportionately work in the U.S. housing, construction and home-improvement trades.

So, as fewer houses are built in the United States, fewer housing-related workers are needed, and that means fewer dollars are going into the pockets of Wal-Mart shoppers — hence the comment last week by Wal-Mart Chief Executive Lee Scott that its shoppers are running out of money by the end of the month and Wal-Mart de Mexico reporting earlier this month that its same-store sales fell 2 percent in July.

“That impact, in terms of retail spending, falls disproportionally on Wal-Mart versus some of its other competitors,” Johnson said of the ripple effects that the slowing housing market is having on Wal-Mart’s business.