Bargain items may become less attractive.
As the nation’s three largest retailers begin a major sales week, former Walmart US CEO Bill Simon warned that consumer spending is starting to decline for the first time in a decade.
He blames a list of headwinds weighing on consumers, including inflation, rising interest rates, federal budget fights, political polarization, student loan repayments, and new global tensions related to violence in Israel. He blames it.
“This kind of jockeying leaves consumers exhausted and wary,” the former CEO of Walmart US told CNBC’s “Fast Money” on Monday. “For the first time in a while, consumers have a reason to pause.”
The timing comes as Amazon launches its two-day Prime Big Deal Days sale on Tuesday. Walmart and Target are competing with their own sales events to get an early start on the holiday shopping season.
Simon observes that there are clear similarities among retailers. That means the bargains aren’t that deep.
“It’s usually referred to as a 50-inch TV. [is] Something like $199.And now it’s said to be a 50-inch TV. [is] 40% off,” Simon said. “If I’m not really proud of my price range, I use percentages. I think inflation is driving up relative prices.”
Amazon, Walmart and Target’s stock prices have been under pressure over the past two months. Target’s performance is the lowest of the three, at 19% off.
Simon, who sits on the boards of Darden Restaurants and HanesBrands, believes Walmart has a big advantage over its competitors right now.
“It’s all because of the food business,” Simon said. “They probably have both the attention and food distribution to have a better Christmas than their competitors.”
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