How Consumer Spending Slowdown Affects Major Corporations

Changes in Consumer Behavior

Consumers are exhibiting more cautious spending behaviors, with a notable shift back to services and entertainment post-pandemic. This trend is impacting major corporations like McDonald's, Walmart, Target, Starbucks, and Amazon, leading to strategic adjustments and reflecting a broader economic caution.

"And then in China, I know you mentioned that consumer is less confident. I'm just wondering if you're seeing anything to give you pause on an otherwise aggressive unit growth outlook or maybe a change in strategy, whether you're seeing any US brand pushback or anything along those lines would be helpful. Thank you." --- (MCD, earning call, 2024/Q2)

"So I'm going to maybe start going to John David and saying, everybody always wants to know how our consumers feeling generally out there, Any changes in behavior?" --- (WMT, conference, 2024/06/25)

"In addition, business trends continue to reflect a normalization in spending patterns that first emerged more than 2 years ago, a pattern where consumers are remixing their spending back into services and entertainment outside of their homes after curtailing those activities during the pandemic." --- (TGT, earning call, 2025/Q1)

"in a number of key markets, we continue to feel the impact of a more cautious consumer, particularly with our more occasional customer and a deteriorating economic outlook has weighed on customer traffic and impact felt broadly across the industry." --- (SBUX, earning call, 2024/Q2)

"Third, our seller fees are a little lower than expected given the behavior changes we've seen from our latest fee changes." --- (AMZN, earning call, 2024/Q2)

Consumer Sentiment and Confidence

Consumer sentiment remains weak due to persistent inflation (LOW), global economic conditions continue to impact demand (CMCSA), and there are concerns about consumer pushback from price increases (DIS). Regional performance variations, such as on the West Coast, also reflect changing consumer behavior (HD).

"And the segment And the sentiment for the DIY consumer remains a bit weak, influenced by things like persistent inflation." --- (LOW, conference, 2024/06/26)

"Global economic conditions and consumer sentiment have in the past, and may continue to, adversely impact demand for our products and services and our results of operations." --- (CMCSA, sec filing, 2024/1-31)

"I think there's probably some concern out there that the recent price increases might face some consumer pushback." --- (DIS, earning call, 2024/3-21)

"This quarter, we announced over 30 new ads features, and products to help advertisers leverage AI and keep pace with the evolving expectations of customers and users. Across Search, PMax, DemandGen, and Retail, we're applying AI to streamline workflows, enhance creative asset production, and provide more engaging experiences for consumers." --- (GOOG, earning call, 2024/Q2)

"Absolutely. Another housing question, so we move on to some other topics. So we've heard from some other retailers that maybe West Coast sort of started a correction first, both on the consumer side and your regional performance, how would you describe and are you seeing any of that factor?" --- (HD, conference, 2024/04/04)

Impact on Revenue and Sales

Major corporations are experiencing varied impacts on revenue and sales due to consumer spending slowdown. McDonald's and Target report declines in sales and revenue, while Starbucks sees a drop in comparable store sales. Conversely, Apple and Amazon report revenue growth, indicating resilience against the slowdown.

"The Company is monitoring the evolving situation, which it expects to continue to have a negative impact on Systemwide sales and revenue as long as the war continues." --- (MCD, sec filing, 2024/Q2)

"Total revenue was down 3.1% in the quarter, reflecting a 3.9% increase in other revenue." --- (TGT, earning call, 2025/Q1)

"Luca Maestri : Thank you, Tim, and good afternoon, everyone. We are very pleased to report a new June quarter revenue record of $85.8 billion, up 5% year-over-year, despite 230 basis points of negative foreign exchange impact." --- (AAPL, earning call, 2024/Q3)

"Revenue growth over the prior year was driven by 8% net new company-operated store growth, partially offset by a 3% decline in comparable store sales from a 5% decrease in transactions and a 2% increase in average ticket as we continue to navigate through a value-driven consumer environment.US led the average ticket increase of 4%, driven by pricing and multi-beverage orders." --- (SBUX, earning call, 2024/Q3)

"In 2023, we had meaningful improvement across our financial results.Net sales were $575,000,000,000 an increase of $61,000,000,000 year over year or 12% excluding the impact of foreign exchange." --- (AMZN, event transcript, 2024/05/22)

Sector-Specific Effects

Financial institutions like JPMorgan Chase and Bank of America are experiencing headwinds due to consumers and small businesses running out of excess money, leading to flat or slightly declining deposit balances. Despite some stability in account balances, the overall outlook remains cautious with net headwinds anticipated.

"And so we don't know the effect of that. We do know that consumers are running out of excess money. Small businesses are running out of excess money." --- (JPM, event transcript, 2024/05/20)

"The lower average balance accounts from pre-pandemic are basically bouncing around at the same level right now, not going down, not going up, and the higher ones are stable but they are down 15%, 20% for people with a half million, million dollar balances, largely because they moved it in the market, so we feel it’s stabilized." --- (BAC, earning call, 2024/Q1)

"And I think the single most notable thing is just this effect where in the -- while it is true that real incomes have gone up in the lowest-income cohorts, within that there's obviously a probability distribution and there's some or rather just a distribution of outcomes." --- (JPM, earning call, 2024/Q1)

"Some cuts will come into the curve at some point. And in the normal course, if you kind of do a very, very, very supplemental model of the company, you would have like expenses grow -- revenue is growing at some organic GDP like rate, maybe higher, and expenses growing at a similar slightly lower rate, producing a sort of relatively stable overhead ratio." --- (JPM, earning call, 2024/Q2)

"But on balance, net across all those various effects, we still think that there are net headwinds to deposit balances. So when we think of our balance outlook, we see it as flat to slightly down maybe, with our sort of market share and growth ambitions offsetting those system-wide headwinds." --- (JPM, earning call, 2024/Q2)

Cost-Cutting Measures

Google and Intel are implementing significant cost-cutting measures, with Google laying off 12,000 employees and Intel reducing non-variable cost of sales by $1 billion. These actions reflect efforts to manage expenses amid a consumer spending slowdown.

"In 2023, Google had its largest layoff ever, cutting 12,000 employees or 6% of its workforce. This year, layoffs have continued across various divisions despite the CEO receiving 2023 compensation of $235,105,454. Shareholders want to have a say in the important matters of the companies in which they invest and work." --- (GOOG, event transcript, 2024/06/07)

"We will also reduce spending within non-variable cost of sales by approximately $1 billion." --- (INTC, earning call, 2024/Q2)

"$12 billion to $14 billion, increased capital efficiency has a positive impact to gross margins over time, but we will also accelerate improvements by generating roughly $1 billion of savings in non-variable cost of sales in 2025." --- (INTC, earning call, 2024/Q2)

Supply Chain Adjustments

Major corporations are adjusting their supply chains to address the consumer spending slowdown. UPS and FedEx report revenue declines and fundamental changes in supply chain patterns. Walmart and Target focus on resilience and modernization, while Deere & Company enhances resiliency and cost savings amidst lower demand.

"In Supply Chain Solutions, revenue decreases were driven by volume and market rate declines in Forwarding, somewhat offset by growth in our Logistics businesses." --- (UPS, sec filing, 2024/Q1)

"Yes. The supply chain patterns are fundamentally changing and we can see it." --- (FDX, conference, 2024/05/29)

"And so we're really proud of our position from a supply chain standpoint. We worked diligently to provide resilience across the food supply chain over the past couple of years.I'm working on a number of initiatives, Doug, things like long term agreements with our suppliers to make sure that they can make the investments they need to secure future food supply, working diligently in things like sustainability across the key stakeholder groups to equip farmers to make sure that our food supply is steady for years to come." --- (WMT, event transcript, 2024/06/05)

"We discussed the supply chain investments we're making to modernize how we distribute merchandise, including the rollout of additional sortation centers to increase the speed and efficiency of our last-mile delivery." --- (TGT, earning call, 2025/Q1)

"Coupled with our dual sourcing strategies, we've been able to enhance supply chain resiliency in tandem with cost savings, which has been crucial to optimizing returns amidst lower demand." --- (DE, earning call, 2024/Q2)

Competitive Landscape and Market Share

Major corporations like Microsoft, Netflix, Google, Apple, and Disney face intense competition, with each adapting uniquely to maintain market share. Microsoft and Netflix acknowledge the competitive landscape but focus on their strengths. Google confronts AI-driven competition, Apple operates in a highly competitive market, and Disney emphasizes cost savings and predictability.

"So that's how I think about the competitive landscape. And then obviously, I mean, in the talent space, we have a ton of companies that are selling recruiting solution in the learning space as well." --- (MSFT, conference, 2024/06/06)

"So I'd say the competitive landscape is still really intense. But I would say honestly, Michael, we don't spend too much time obsessing about it because there's frankly not much we can do about what they're doing." --- (NFLX, conference, 2024/05/15)

"This shareholder proposal is particularly crucial as Google confronts its biggest competition yet in the search engine landscape with the ascent of generative AI." --- (GOOG, event transcript, 2024/06/07)

"I think it has been and is through last quarter, the most competitive market in the world." --- (AAPL, earning call, 2024/Q2)

"today's competitive environment, cost savings and predictability are critical to customers." --- (DIS, press release, 2024/06/25)

Future Outlook and Strategies

Major corporations are focusing on growth despite economic pressures, with strategies including maintaining dividends, reinvesting in business, and creating connected experiences across platforms. They emphasize forward-looking approaches, considering macroeconomic impacts and stakeholder needs to navigate consumer spending slowdowns.

"After that, we'll open the call to questions from analysts. Please note that some of the information you'll hear during our discussion today will consist of forward-looking statements, including, without limitation, those regarding revenue, gross margin, operating expenses, other income and expense, taxes, capital allocation and future business outlook, including the potential impact of macroeconomic conditions on the company's business and results of operations." --- (AAPL, earning call, 2024/Q2)

"And we saw at the time, even though every pressure was towards shrinking and reducing cost and becoming smaller, we saw that the view of the forward future will be about growth." --- (JPM, Investor Day, 2024/05/20)

"Our strategy consists of maintaining and growing our dividend over time, reinvesting in our business at an appropriate level of financial return; and finally making value enhancing share repurchases after de-levering our balance sheet." --- (PFE, earning call, 2024/Q2)

"And when you think about the strategy, it's very much we are in a fantastic position because we are able to orchestrate across all three of those circles, if you will, and create these connected experiences that can run from a PC experience or a mobile experience to what's happening in the apps that we deliver around the world in our productivity suite to what our customers can then go either extend from the productivity suite or build new for their own customer employee experiences." --- (MSFT, Jefferies Software Conference, 2024/05/29)

"anonymous: Amazon continues to look ahead to what's possible as we focus on inventing the future for the planet, our people, our customers, our communities, and for business." --- (AMZN, AGM, 2024/05/22)