The draw of bargains may be fading.
As three of the nation’s biggest retailers kick off a key sales week, former Walmart U.S. CEO Bill Simon warns consumers are starting to buckle for the first time in a decade.
He’s blaming a list of headwinds weighing on consumers including inflation, higher interest rates, federal budget wrangling, polarized politics and student loan repayments — and now new global tensions connected to violence in Israel.
“That sort of pileup wears on the consumer and makes them wary,” the former Walmart U.S. CEO told CNBC’s “Fast Money” on Monday. “For the first time in a long time, there’s a reason for the consumer to pause.”
The timing comes 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 jump on the holiday shopping season.
Simon observes the retailers have a glaring thing in common: The bargains are not as deep.
‘You’re not real proud of your price point’
“They usually say 50-inch TV [is] $199 or something like that. And now, they say 50-inch TV [is] 40% off,” said Simon. “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.”
Shares of Amazon, Walmart and Target are under pressure over the past two months. Target is performing the worst of the three — off 19%.
Simon, who sits on the Darden Restaurants and HanesBrands boards, believes Walmart has the big advantage over its competitors right now.
“It’s solely because of the food business,” Simon said. “They’re going to have both the eyeballs and the food traffic to probably have a better Christmas than maybe their competitors.”