The attractiveness of the bargains could wane.
As three of the country’s largest retailers embark on a major sales week, former Walmart US CEO Bill Simon warns that consumers are starting to relent for the first time in a decade.
He blames a range of headwinds weighing on consumers, including inflation, higher interest rates, federal budget disputes, polarized politics and student loan repayments – and now new global tensions related to violence in Israel.
“These types of pileups stress the consumer and make them distrustful,” the former CEO of Walmart US told CNBC’s “Fast Money” on Monday. “For the first time in a long time, consumers have a reason to pause.”
The timing has come as Amazon begins its two-day Prime Big Deal Days sale on Tuesday. Walmart and Target are trying to compete with their own sales events to get an early start on the holiday shopping season.
Simon notes that retailers have one striking thing in common: the bargains aren’t that great.
“You’re not really proud of your price”
“Usually it says 50-inch TV [is] $199 or something like that. And now it’s called a 50-inch TV [is] “40% off,” Simon said. “You use percentages when you’re not really proud of your price. I think inflation is driving up relative prices.”
Shares of Amazon, Walmart and Target have been under pressure over the past two months. Target is the worst performer, down 19%.
Simon, who sits on the boards of Darden Restaurants and HanesBrands, believes Walmart currently has a major advantage over its competitors.
“It’s entirely because of the grocery store,” Simon said. “They will have both the attention and the food traffic to probably have a better Christmas than perhaps their competitors.”
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