Bargain Battles: How Top Retailers are Adjusting Amid Economic Strains

Three of the nation’s largest retailers are poised at the starting line of a crucial sales week.

by Faruk Imamovic
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Bargain Battles: How Top Retailers are Adjusting Amid Economic Strains
© Getty Images News/Alex Wong

Three of the nation’s largest retailers are poised at the starting line of a crucial sales week. However, Bill Simon, former CEO of Walmart U.S., paints a gloomy picture, warning of consumers’ waning confidence.

This sentiment, which hasn't been felt for nearly a decade, emerges amid a maelstrom of economic and geopolitical factors.

Factors Weighing on the Consumer

Inflation, rising interest rates, student loan repayments, federal budget disagreements, and a divided political climate are all playing their part in curbing consumer enthusiasm.

Add to these the recent global unease stemming from unrest in Israel, and you've got a recipe for consumer apprehension. “That sort of pileup wears on the consumer and makes them wary,” Simon told CNBC’s “Fast Money”.

“For the first time in a long time, there’s a reason for the consumer to pause”.

Retail Giants’ Tactical Shift

While consumers grow wary, retail giants Amazon, Walmart, and Target are not standing still.

Amazon launches its two-day Prime Big Deal Days, with Walmart and Target hot on its heels, introducing their own sales events to capture early holiday shoppers. But there's a noticeable change in tactics. Bargains seem more subdued this year.

Simon points out, “They usually say 50-inch TV [is] $199 or something like that. And now, they say 50-inch TV [is] 40% off”. This shift to percentage discounts, he believes, is a sign that inflation is pushing the price points upwards. “You use percentages when you’re not real proud of your price point,” Simon remarks.

The performance of the three retail behemoths has reflected this challenging environment, with their shares facing pressure. Notably, Target's shares have taken the biggest hit, declining by 19%.

Walmart’s Unique Position

While the retail environment seems gloomy, Simon believes Walmart possesses an edge over its competitors.

His rationale? Walmart’s strong presence in the food business. “It’s solely because of the food business,” Simon shared, emphasizing that this could give Walmart the leverage it needs to outshine its rivals this festive season.

“They’re going to have both the eyeballs and the food traffic to probably have a better Christmas than maybe their competitors”.

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