“Inflation has been just a killer on the consumer, especially food and rent,” former Walmart U.S. President and CEO Bill Simon told Fox News Digital on Wednesday. “It’s just brutal. It’s very difficult to overcome.”
Simon, who joined Walmart in 2006 just before the country saw its last major economic crisis, explained how inflation poses a bigger risk to Americans’ wallets when compared to a looming recession.
“Until we start seeing significant shifts in the labor market, it’s hard to envision what a recession looks like. We’ve not had a full employment recession in the country ever,” the former CEO said. “And so I think with employment levels still relatively high and wage growth year-on-year relatively high, there’s more inflationary pressure than there is recessionary pressure.”
According to the former CEO, there’s typically strong shifts in spending patterns during times of economic stress. Shoppers turn to less expensive proteins like chicken, and purchase smaller quantities as opposed to buying in bulk.
Consumers will also “trade down” when choosing which retail store to shop at.
“Part of the trade-off is you got to take the hassle of the crowd in the big box [retailers]. And in exchange for that hassle, you get a better price,” Simon said. “In better economic times, people choose less crowds and smaller buildings… when the economic times get difficult, Walmart gets crowded. You see people who would have shopped somewhere else in the big box for the price.”
Simon also recalled previously conducting a focus group with moms on healthy food choices, when one mother humbly confessed she couldn’t afford skinless chicken breast and instead opted for the affordable Happy Meal that comes with a toy.
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