Wal-Mart shares slid 5% on Tuesday last when it announced it was cutting its full-year profit forecasts by 3%. The reasons for the poor outlook don’t sound like good news for the Indian gem and jewellery industry. Essentially, the American consumer is running out of money, according to Wal-Mart CEO Lee Scott. Specifically, the low end, budget-conscious customer is struggling to make ends meet till next pay day. US consumer spending overall seems to have slowed down.

The budget-conscious consumer is typically the one that buys the low-end mass-market jewellery that is the mainstay of the Indian industry’s exports. As it is, getting the consumer’s attention is becoming more difficult with each passing day. New-fangled electronic gadgets that do more and more wonderful tricks and are heavily promoted by giant, globe-girdling firms, have centre-stage in the consumer’s attention. They have a distinct advantage when it comes to the low end consumer deciding where and how much of his or her already tight discretionary spend is to go. The current scenario makes it look like there isn’t going to be any money left for discretionary spending for some time to come.

Wal-Mart, if you’ll pardon my nauseating repetition, is the world’s largest jewellery retailer, is already slashing prices on its budget apparel lines in a bid to re-establish itself as the king of discount retailing. When Wal-Mart starts slashing prices, manufacturers get burned to a crisp.

End-August and the first week of September is when the Indian diamond and jewellery manufacturing industry’s Christmas season begins. The big retailers send their buyers in with specific orders for their planned holiday season offerings. But if Wal-Mart thinks it’s time to tighten its belt…