Retail bargains are becoming less generous – and it’s causing shoppers to stop spending, claims Walmart‘s former CEO.
Bill Simon, who was in charge of the retail giant between 2010 and 2014, said consumers are facing a perfect storm of inflation, elevated interest rates, the return of student loan repayments – and global tensions thanks to the conflict in Israel.
It means ‘for the first time in a long time, there’s a reason for the consumer to pause,’ he added.
On Tuesday Amazon began its two-day Prime sale – prompting Walmart and Target to generate their own sales events to compete.
But Simon said bargains this year are nowhere near as deep. He told CNBC: ‘They usually say 50-inch TV is $199 or something like that. And now, they say 50-inch TV is 40 percent off.
Bill Simon, who was in charge of Walmart between 2010 and 2014, said discounts are becoming harder for shoppers to find
‘You use percentages when you’re not real proud of your price point. I think you’ve got inflation pushing the relative price points up so even the retailers are feeling the inflationary push.’
Shares of Amazon, Walmart and Target have all been under pressure over the past two months. Target has performed the worst of all three with stocks trading at 28 percent less than last year as of Tuesday afternoon.
Simon, who now sits on the boards of Darden Restaurants and Hanes Brands, predicts Walmart will fare better than its competitors ‘solely because of the food business.’
‘They’re going to have both the eyeballs and the food traffic to probably have a better Christmas than maybe their competitors,’ he told CNBC.
His comments come after Walmart’s current CEO said food sales at the chain were being dampened by the soaring number of Americans taking weight loss drugs such as Ozempic.
Simon, who now sits on the boards of Darden Restaurants and Hanes Brands, predicts Walmart will fare better than its competitors ‘solely because of the food business’
Inflation in the US has accelerated for a second consecutive month to a 3.7 percent annual rate – up from 3.2 percent in August
In an interview with Bloomberg last week, John Furner said anonymized data analyzed how such appetite suppressants affected spending.
‘We definitely do see a slight change compared to the total population; we do see a slight pullback in overall basket,’ he added. ‘Just less units, slightly less calories.’
Despite this, sales in-store and on Walmart’s digital channels were up 6.4 percent in the last quarter.
The retail giant also saw its international net sales swell to $27 billion as food traffic increased 2.8 percent at its more than 10,500 locations.
Despite wider economic uncertainty, consumer spending has remained robust, bolstered in part by a strong labor market.
The current US rate of inflation is hovering at 3.7 percent – well above the Federal Reserve’s two percent target.
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