Many CEO’s are under constant pressure to increase earnings quarter after quarter. The current inflation numbers create a perfect backdrop for CEO’s to raise prices… and to increase earnings. Their input costs have increased, but they can also add more for their own company’s bottom line. Those “extra” increases can be hidden in the “mix”. Also, because almost every other CEO is raising prices, they avoid criticism by being just part of the crowd who is doing the same. “We are forced to raise prices although we don’t want to raise them.”
In the robust economy we have had for a very long-time, it has become “unfashionable” to shop around for better prices. Many consumers are going to have to learn to shop around and defer purchases. This is known as “voting your economic dollar.” Sadly, many will stick their head in the sand hoping things will get better until it has severe effects upon their personal budgets.
In retail, the game is always to get people into the habit of buying without comparing. First, the consumer gets a coupon or sees a sale and buys something. Once many consumers have established the habit of buying something, they stop checking the prices and they continue to buy the product over and over again, even as the price ratchets up. This game is as old as the hills.
Store brands were often priced significantly lower than branded products. A lot of the time, the store brands were made by the exact same manufacturer as the branded products. The store brands provide a much higher gross profit to the retailer. So even though the store brands were priced significantly lower, the retailer made more money from them than branded products.
For example, Walmart’s store brand prices have increased for many products, sometimes they are even more expensive than the branded products. Many consumers often don’t do this simple comparison, but assume store brands are automatically cheaper.
Another technique retailers have been using is significantly increasing staple goods prices, such as bread, milk and eggs. Most people get those items regularly as essentials so they feel “trapped”. Not so fast! By shopping around, the items can often be found at much lower prices. I found some prices at Costco to be much lower than Walmart’s.
Shopping around and being aware of the games being played are essential practices to keep retailers in check. Habits can work for you or against you.
You don’t have time to shop around? Well, there is a price for everything in life. There is no free lunch! If you want to give away money, there are many who would welcome your generosity.
Vote your economic dollar and stay ahead of onslaught of inflation.
Be smart, be well-read, be aware and be successful.
