A couple of years ago it was fashionable among CEOs to blame bad results on supply chain disruptions, even in cases where supply chains clearly had nothing to do with it. Later on, they blamed price hikes on inflation long after the Producer Price Index had settled down to normal. Today, the go-to excuse for poor results is "inflation weary" customers:
For the past few years as prices soared, many consumers kept buying affordable treats like Doritos and Lay’s in lieu of bigger-ticket splurges such as restaurants, concerts or travel. But now, they are limiting their spending in all areas, said Jamie Caulfield, PepsiCo’s chief financial officer.
Sales volume for PepsiCo’s Frito-Lay North America business dropped 4% in the latest quarter, the company said. “There is a cohort of consumers that have become more price conscious,” Caulfield said. “They’re looking for more deals to get more for their money.”
This isn't rocket science. We actually have data on how much consumers are spending, and the Commerce Department releases a new edition every month. Here it is:
I don't know if consumers are weary of inflation—though it would be a little odd if they were, since the CPI has been hovering around 3% for over a year. This might be too high for the Fed but it's more-or-less unnoticeable to ordinary consumers.
But whether they are or not, consumer spending has been increasing at a rock-steady rate ever since the economy bounced back from COVID. It's just flatly untrue that consumers are "limiting their spending in all areas." If PepsiCo's sales of Doritos last quarter were disappointing, they need to find a different excuse for it.
i'm guessing they still make just as much profit on doritos as they did before the pandemic; lower volumes/higher margins
but yeah, raise the price of doritos by 30% and eventually a few of your customers start making popcorn or they buy generic chips
substitution is a bitch
Turns out being an effective monopoly can be bad for business.
Some of their gimmicks are just tiresome now.
Eh, some customers have reduced their spending as higher prices have eaten away at their discretionary funds. But otherwise it's basic demand curve rules: raise the price and consumers buy less, lower the price and consumers buy more.
When you raise the price you cut out a certain portion of the market that no longer finds enough value in your product at the new price point.
These doofuses need to stop blaming Bidenflation for the fact that customers don't value their product enough to pay higher prices for it.
Name-brand snack and processed food products (potato chips, mac-n-cheese, cookies, etc.) really have gotten super expensive the past couple of years and it's purely corporate greed because the generic supermarket or off-brand alternatives are like half the price a lot of times. They're just now noticing that people are starting to shift their buying habits? What did they think was going to happen?
Kind of like all the lazy reporting in stories about restaurant or retail chains going broke that give inflation and higher labor costs as the reason, and then, way, way down at the bottom, if they mention it at all, there's the bit about how they had been bought by a private equity firm a few years ago who loaded the company up with so much debt, they couldn't handle even the slightest economic headwinds any longer.
It's not lazy reporting, it's agenda reporting. They bury the lede intentionally because they're really looking to get people riled up about labor costs (oh, the horror) or whatever hobby horse they're riding.
The goal, as Kevin often mentions, is to make people think everything is falling apart and must be saved asap by freedom.
Joe
AND in the case of snack foods you have smaller portions being bought for higher prices. I think they call it shrinkflation(?)
So they lied about price hikes being because of inflation, they lied about the impacts of supply chains, they lied about the "epidemic" of shoplifting, and now they're lying about consumer spending. Maybe the take away here is that business leaders should be treated as liars until proven otherwise. Maybe every statement by a business leader should be explained as unsupported unless evidence is provided.
cough * trump * cough
The shoplifting is really, really bad in some areas. One of the kids worked at Walgreens for a while (a seriously poorly run company) and she hated watching people just grab stuff and walk out the door with it. Another kid works at Target and just got injured trying to stop someone stealing a game console -- and that's not even talking about all the gift card fraud, which is massive and pervasive.
I don't understand the California shoplifting law and how that happened.
https://jabberwocking.com/is-shoplifting-up-or-down/
Taking something by force in California is robbery not shoplifting.
Also, is this the law you are talking about:
https://apnews.com/article/fact-check-california-bill-553-shoplifiting-illegal-false-808408149947
Whenever I've been in our local Walgreen's, about 8,000 square feet or so at a guess, it's never had more than two people in the retail area at any one time. And they're a) busy with restocking and other futzing around, and b) almost always at least 20 yards from the entrance until they can notice somebody hanging around the registers to check out. Sometimes there's someone at a special-purpose counter in one corner, about 30 yards away from the entrance. The pharmacy usually has two people in it, but of course it's in the farthest corner from the entrance and behind locked doors. Tag alarms at the door won't stop anyone from just sashaying out and getting long gone before the cavalry could get anywhere near.
They seriously need to rethink their operation, especially if they don't think they're in business to encourage shoplifting. Unlike your kids, these employers don't seem able to figure out the right moves.
A couple of anecdotes don't equate to an epidemic. Also, here's the LA Times story with the National Retail Federation admitting that it overstated the impact of shoplifting on losses by an order of magnitude. The drove the narrative with a demonstrably and knowingly false number. Not to mention the CVS stores that were closing because of shoplifting that were revealed to have been slated for closure well before the reports of shoplifting and were related to rents vs. revenues, not losses.
So, the Wall Street Journal reported easily-refuted CEO excuse-making as fact.
Also, the sun rose in the east this morning.
All snack-food purveyors up and down the chain are scared spitless of what general Ozempic use will do to their business. One part of their response is tuning up the excuse machine, as here. I don't doubt another is fierce lobbying of the FDA, and that won't come cheap.
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