The attraction of deals may be diminishing.Thank you for reading this post, don't forget to subscribe!
Former Walmart U.S. CEO Bill Simon warns that consumers are initiating to buckle for the first time in ten years as three of the largest retailers in the country launch a crucial sales week.
He attributes this to a range of challenges impacting consumers, including inflation, higher interest rates, federal budget disputes, polarized politics, student loan payments, and now, new global tensions associated with violence in Israel.
“That kind of accumulation wears down the consumer and makes them cautious,” expressed the former Walmart U.S. CEO in an interview with CNBC’s “Fast Money” on Monday. “For the first time in quite a while, there’s a reason for the consumer to hesitate.”
The timing aligns with Amazon initiating its two-day Prime Big Deal Days sale on Tuesday. Walmart and Target are striving to compete with their respective sales events to gain an early advantage in the holiday shopping season.
Simon observes that the retailers share a prominent characteristic: the discounts aren’t as significant.
‘You’re not particularly proud of your price point’
“Typically they would state a 50-inch TV costs $199 or something like that. And now, they’re stating a 50-inch TV is 40% off,” mentioned Simon. “You use percentages when you’re not particularly proud of your price point. I think inflation is pushing up the relative price points.”
Shares of Amazon, Walmart, and Target have been under pressure in the past two months. Target is performing the worst among the three, down 19%.
Simon, who serves on the boards of Darden Restaurants and HanesBrands, believes that Walmart presently possesses a significant advantage over its competitors.
“This is solely due to the food business,” Simon stated. “They will likely have both the customer attention and the food traffic to potentially have a better Christmas than their competitors.”
Source : cnbc.com