Former Walmart CEO Bill Simon says that, though inflation has started to moderate, he doesn’t see prices coming down anytime soon.
Simon was on CNBC’s “Squawk on the Street” yesterday and added that the shoppers “are going to have to get used to” the higher prices.
“We often see the habits that they develop in a difficult time stick until something else changes…it could get worse or it could get better,” he told CNBC. “As long as the macro issues of the economy stay the same it is expected that a lot of this will be sticky.”
With the wage growth rate and employment rate remaining high, Simon does not see prices going down until there is a drop in one or the other.
Discretionary spending continues to decline, which is a bad sign for retailers like Target, according to Simon. Those stores will have to differentiate themselves and have an offering of product or service that is in demand.
“Target for many, many years was really good at differentiating itself from Walmart,” Simon said. “On the surface there might not be a lot of differences but they built a brand that was distinctively different from Walmart.”
Simon added that Walmart is best positioned in the current economy because it is getting new business from that upper third class and food remains a catalyst to draw traffic. The former Walmart CEO also predicts that Costco will thrive in this economy.
“Those without as much food will struggle to keep up,” Simon said, referring to those retailers which sell more discretionary items than staples.
