Arsene Wenger's side had been willing to wait until the last moments of the transfer window with the belief that they could lure the France international to the Emirates Stadium.
But the Gunners ultimately failed to convince Benzema to leave Real Madrid, much to the frustration of Merson, who believes that the lack of ambition shown in the market is not acceptable.
"If you're an Arsenal season ticket holder, you're paying top dollar," Merson told Sky Sports.
"It's their money. It's the fans' money. It's not Arsene Wenger's money. It's not the club's money. It's the fans' money that they've paid to buy players.
"The whole idea of going to this big stadium that holds 60,000 people was to bring in top quality players. I don't know [why Arsenal aren't spending the money].
"Just put in a bid for Benzema. £75 million. If Real Madrid turn around and say: 'We're not selling him,' you can't argue with that. You've put in a bid and if they turn it down or the lad doesn't want to come, that's the way it goes. But show something.
"It cheats the fans. The fans think 'what are we coming for? We turn up every week, we pay the highest prices and what for? Top four? We might get a day out at Wembley again in the FA Cup. Wow-wee."
And Merson poured scorn on the belief that Arsenal will improve on last season's finish and mount a title challenge.
"There's a saying in life: Keep on doing the things you do and you'll get the same results," he added.
"How different is this season going to be for Arsenal? It's the same team that finished 12 points behind Chelsea last year. Why, this year, will the team finish above Chelsea?
"I can tell you now, there will be a phase this season when they'll be unbelievable, win seven on the trot and play the best football you've ever seen. But at the end of the season, with this team and no signings, I'd be absolutely shocked if they won the Premier League."
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