The death of the bargain! Struggling retailers are no longer offering competitive deals, says former Walmart CEO, as Amazon Prime sales take off
Retail bargains are becoming less generous – and this is causing shoppers to stop spending, claims the former CEO of Walmart.
Bill Simon, who led the retail giant between 2010 and 2014, said consumers are facing a perfect storm of inflation, high 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 is a reason for consumers to pause,” he added.
On Tuesday, Amazon kicked off its two-day Prime sale, prompting Walmart and Target to host their own sales events to compete.
But Simon said the bargains aren’t nearly as deep this year. He told CNBC: ‘They usually say a 50-inch TV costs $199 or something like that. And now they say 50-inch TVs are 40 percent off.
Bill Simon, who led Walmart between 2010 and 2014, said it is becoming increasingly difficult for shoppers to find discounts
‘You use percentages if you are not really proud of your price. I think inflation is pushing relative prices up so that even retailers are feeling the inflation.”
Shares of Amazon, Walmart and Target have all been under pressure over the past two months. Target performed the worst of all three, with shares down 28 percent from last year as of Tuesday afternoon.
Simon, who now sits on the boards of Darden Restaurants and Hanes Brands, predicts Walmart will outperform its competitors “just because of the food industry.”
“They’ll have both the eyeballs and the food traffic to probably have a better Christmas than maybe their competitors,” he said. CNBC.
His comments come after Walmart’s current CEO said food sales at the chain were dampened by the rising 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 outperform its competitors ‘just because of the food industry’
US inflation accelerated for the second month in a row to 3.7 percent annualized – 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 certainly see a small change relative to the total population; we are seeing a slight decline in the overall basket,” he added. ‘Just fewer units, slightly fewer calories.’
Nevertheless, sales in Walmart’s stores and digital channels increased by 6.4 percent last quarter.
The retail giant also saw its international net sales increase to $27 billion, while food traffic at its more than 10,500 locations increased 2.8 percent.
Despite broader economic uncertainty, consumer spending has remained robust, supported in part by a strong labor market.
The current US inflation rate hovers around 3.7 percent – well above the Federal Reserve’s two percent target.