The former U.S. CEO of Walmart says consumers are facing pressures they haven’t felt in years.
Appearing on CNBC on Monday (Oct. 9), Bill Simon listed a number of headwinds facing Americans, including inflation, interest rates, student loan repayments and the Israeli conflict.
“This kind of jockeying leaves consumers exhausted and wary,” he says. “For the first time in a while, consumers have a reason to pause.”
As the report notes, Simon’s comments came during a significant sales week for his former company and other major retailers. Amazon launched its “Prime Big Deal Day” sale on Tuesday (October 10), and Walmart and Target are offering unique events to attract early holiday shoppers.
But Simon told CNBC he gave an example of a retailer advertising a 40% off sale on a 50-inch TV rather than displaying the price, noting that the bargains the retailer offers are not as deep. He said it may not look as attractive this year because there is no such thing. .
“You use percentages when you’re not really proud of your price range,” Simon says. “I think inflation is driving up relative prices.”
And in the minds of consumers, inflation will continue into the spring of 2025, PYMNTS CEO Karen Webster wrote on Monday.
“Many Americans are beginning to be unable to withstand the pressures of high prices in ways that were not evident a year ago,” the report said. “Of greater concern is how consumers manage their day-to-day expenses, including how they prioritize and pay their monthly bills.”
In this case, the key number is 41%, which is the number of U.S. consumers who have started making partial payments to meet their monthly financial obligations.
“So today we have very different consumer behavior than we had a year ago, and that behavior will likely impact everyone and every business for the rest of this year and well into 2024.” Webster wrote.
According to research from PYMNTS Intelligence, consumers say they are paying an average of 29% more for retail purchases and an average of 23% more for groceries compared to a year ago. And in fact, since 2019, prices for grocery and retail purchases have increased by more than 24% cumulatively.
“As a result, consumers base their perceptions of inflation entirely on how much more they spend today compared to a year ago,” Webster wrote. “It’s them, not the average consumer.”
As for large retailers, Simon told CNBC he believes Walmart has an advantage over competitors “solely” because of its food business.
“They probably have both the attention and food distribution to have a better Christmas than their competitors,” he said.