Consumers starting to buckle for first time in a decade, former Walmart U.S. CEO Bill Simon warns

The excitement surrounding bargain hunting may be losing its luster, as three major retailers gear up for a crucial sales week. Bill Simon, former Walmart U.S. CEO, has sounded a cautionary note, suggesting that consumers are beginning to feel the strain for the first time in a decade. Simon attributes this to a confluence of factors, including inflation, higher interest rates, political polarization, federal budget wrangling, and student loan repayments. Adding to the mix are new global tensions stemming from the violence in Israel. “That sort of pileup wears on the consumer and makes them wary,” Simon explained during an interview on CNBC’s “Fast Money” on Monday. “For the first time in a long time, there’s a reason for the consumer to pause.”

This development comes at a time when Amazon is launching its highly anticipated two-day Prime Big Deal Days sale on Tuesday. In an effort to compete and gain an early advantage in the holiday shopping season, both Walmart and Target are hosting their own sales events. However, Simon points out a common thread among these retailers: the discounts are not as substantial as they used to be. “They usually say a 50-inch TV is $199 or something like that. And now, they say a 50-inch TV is 40% off,” Simon observed. “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.”

Over the past two months, shares of Amazon, Walmart, and Target have faced some pressure. Target, in particular, has experienced the greatest decline, with its stock down 19%. Simon, who serves on the boards of Darden Restaurants and HanesBrands, believes that Walmart currently holds a significant advantage over its competitors. “It’s solely because of the food business,” Simon emphasized. “They’re going to have both the eyeballs and the foot traffic to probably have a better Christmas than maybe their competitors.”

While the current landscape presents challenges for retailers, it also offers opportunities for innovation and adaptation. Walmart, Amazon, and Target have all demonstrated their ability to evolve and cater to changing consumer demands. By recognizing the shifting dynamics and adjusting their strategies accordingly, these companies can continue to thrive in the competitive retail market. As the holiday season approaches, consumers can look forward to an array of options and experiences provided by these industry leaders.