Walmart’s former U.S. CEO says consumers are facing pressures they haven’t felt in years.
Speaking to CNBC Monday (Oct. 9), Bill Simon listed a host of headwinds Americans are dealing with, including inflation, interest rates, student loan repayments and the conflict in Israel.
“That sort of pileup wears on the consumer and makes them wary,” he said. “For the first time in a long time, there’s a reason for the consumer to pause.”
As the report notes, Simon’s comments come during an important sales week for his former company and other major retailers. Amazon launches its Prime Big Deal Days sale Tuesday (Oct. 10), with Walmart and Target offering their own events to attract early holiday shoppers.
But Simon told CNBC that retailers may not seem as attractive this year, as the bargains they’re offering aren’t as deep, offering the example of retailers advertising sales of a 50-inch TV for 40% off, rather than listing its price.
“You use percentages when you’re not real proud of your price point,” said Simon. “I think you’ve got inflation pushing the relative price points up.”
And in the minds of consumers, that inflation will linger until the spring of 2025, PYMNTS CEO Karen Webster wrote Monday.
“Many Americans are starting to crack under the pressure of high prices in ways that weren’t evident even a year ago,” that report said. “More concerning is how consumers now manage their everyday expenses, including how they prioritize and pay their monthly bills.”
In this case, the key number is 41%, the number of American consumers who have begun making partial payments to meet their monthly financial obligations.
“So, today we see a consumer whose behavior is much different than it was a year ago — and in ways that will likely impact everyone and every business for the rest of this year and into 2024,” Webster wrote.
PYMNTS Intelligence finds that consumers say they pay, on average, 29% more for retail purchases and, on average, 23% more for groceries compared to a year ago. And in fact, prices have risen more than 24% cumulatively for both grocery and retail purchases since 2019.
“The result is a consumer whose perception of inflation is based entirely on how much more they spend today versus a year ago,” Webster wrote. “Not the average consumer, but them.”
As for the big retailers, Simon told CNBC he thinks Walmart has an edge over its rivals “solely” because of its food business.
“They’re going to have both the eyeballs and the food traffic to probably have a better Christmas than maybe their competitors,” he said.
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