Unai Emery’s side were handed their second loss of the season at Bramall Lane on Monday night thanks to Lys Mousset’s first-half strike.
Jack O’Connell got on the end of Oliver Norwood’s corner and headed the ball back across goal, allowing Mousset to tap into an empty net.
It was the Blades’ first major scalp since returning to the top flight, as well as their third victory of the season.
But former Gunners ace Merson wasn’t surprised by Monday’s result, insisting his old side are lacking “guile”.
“The defeat to Sheffield United was normal, wasn’t it?” he told Sky Sports.
“I don’t know what anybody expected. This is Arsenal now. It’s just lacklustre. There’s no urgency.
“People say they wouldn’t know if this was Arsene Wenger’s team. I don’t know about that, because defensively they looked comfortable. David Luiz just played in first gear.
“But going forward, they’ve got no guile.
“It looked like Chris Wilder knew exactly what he wanted from his side. But with Arsenal and Unai Emery, it was almost like: ‘See you at half-time and full-time.’
“I kept thinking: ‘What would this Arsenal side look like if Chris Wilder was in charge?’
“It’s accepted. Nobody is going to work the next morning and saying: ‘Oh my God, did you see Arsenal getting beat by Sheffield United?’ Those days are gone.
“It’s accepted through the club, the fans, the manager, everyone.”
Emery didn’t think his team deserved to lose on Monday, lamenting the referee’s decision not to award them a penalty.
“We deserved more. I think the first half the very clear chances were for us,” he told BBC Sport.
“Then we conceded more corners than we wanted and they scored one from a corner. There was a very clear penalty and I think VAR is for that.”