Question-and-Answer Session
Operator
(Operator Instructions). Your first question comes from the line of John Heinbockel – Goldman Sachs. You may proceed.
John Heinbockel – Goldman Sachs
Pete, can you speak to the issue of price elasticity under your format, your customer base both gasoline and merchandise, because you might have expected, as gasoline prices come down and maybe gallons sold might pick up a little bit. We haven't' seen that yet, will we see that in this economy as price elasticity is kind of out the window, and same thing inside the store. Do you think as we see moderating inflation that volumes will move in a more positive direction?
Peter Sodini
John, let's talk about the gasoline for a moment. We got into this situation with dramatically increased costs in gasoline, went up to, north of $3.00 to $4.00. What we saw, and this is confined to major metro areas like Charlotte, as an example, is we found consumer's reaction to the $3.90s and $4.00 and $4.05 a gallon, was to switch to public transportation.
I think the numbers and I'm going from memory, but it seems to me in the Charlotte market, as the costs accelerated up this summer, [ridership] was up somewhere in the range of 17 to 20%. We've seen that in other markets. That we assumed was a normal reaction to a very high cost product. We would have anticipated if someone had asked that question then, if gasoline dropped back to levels that we now see, that we would have seen a consumer coming back driving cars.
The national data belies that fact, and the only thing we can assume is that at least in the interim though retail gasoline prices are down, there seems to be very little elasticity in terms of the consumer behavior.
We've been tracking in the Southeast, except for the month of November, which is the latest month reported, we've been tracking highest in the nation on a regional basis and in the most recent November report we were second highest at 6.1% decline, comparable with California passing us at least for November to 6.3% decline.
So, it's a very unusual consumer we see out there. We have not seen, particularly if you take out the three or four weeks where we had tremendous dislocation in terms of gasoline supply, adjusted merchandise sales in this environment, I think we're are around 2% if you take out those first three weeks which, where product was very scarce. We didn’t think that was particularly bad and quite frankly with the slowing economy, we weren’t the least bit surprised by that.
- To read the full transcript on Seeking Alpha, click here »
