As major retailers initiate a crucial sales week, former Walmart U.S. CEO Bill Simon cautions that consumers are showing signs of faltering for the first time in a decade. He attributes this shift to various challenges impacting consumers, including inflation, higher interest rates, federal budget conflicts, political polarization, student loan repayments, and global tensions related to violence in Israel.
Simon points out that these accumulating challenges make consumers more cautious, giving them a reason to pause after a prolonged period of robust spending. The current timing coincides with Amazon’s Prime Big Deal Days, Walmart, and Target launching their own sales events to gain an early start on the holiday shopping season.
Simon notes a commonality among retailers: the bargains offered are not as substantial as before. He observes that retailers typically promote discounts using percentages when they are not confident about their price points, indicating that inflation is pushing relative price points higher. Shares of major retailers, including Amazon, Walmart, and Target, have been under pressure in the past two months, with Target experiencing the most significant decline at 19%.
Despite the challenges, Simon believes Walmart has a significant advantage over competitors, primarily due to its food business, which is expected to attract both eyeballs and foot traffic, potentially leading to a better Christmas performance compared to competitors.
