Sunday, June 13, 2021

As retail prices rise, companies try not to say it out loud

By Matthew Boyle
From Bloomberg News

From clothes to cereals to trash cans, prices are rising fast. But many businesses do not say so, at least not in the language most buyers will recognize.

If you are the Pampers manufacturer Procter & Gamble Co. ask, it does not raise prices, it takes price. Rival Unilever, known for Dove soap and Ax body spray, says he was “very active with prices.” The price for creativity – at least so far – was retailer Lowe’s Cos., Which the investment told investors on Wednesday that it “increases our price ecosystem.” actually work – respond to rising input and transportation costs and protect their profit margins by making their products more expensive. The manufacturers and sellers of consumer products gained large shares last year, thanks to the pandemic stock, and are now under pressure to maintain performance, although costs are rising, labor markets are tightening and they are comparing with last year’s growth.

The headwind cooled their shares somewhat in 2021, with the Standard & Poor’s 500 Consumer Staples Index rising by just 4.1% until Tuesday this year and S & P’s primary retail index up 7%. Both follow the benchmark of S&P 500 by 13 percent.

The price tags that consumers see on the shelves or online are the result of a complex series of negotiations between sellers and retailers that are done behind closed doors, and neither party wants to sacrifice too much. Retailers sometimes take some of the price increases that the manufacturer charges, and the rest is passed on to buyers. When prices inevitably rise, as at present, manufacturers and retailers both take cover behind neologisms that Wall Street understands, but Main Street sometimes does not.

Package sizes

Take the French yogurt manufacturer Danone, who says it could “pass a price” when inflation accelerates. Campbell Soup Co. said on Wednesday it expects ‘price actions’ to take hold early in the next financial year.

Then there is the grain manufacturer General Mills Inc., whose jargon contains insane phrases such as ‘strategic revenue management’ and ‘holistic margin management’, which is not a language you will find on the back of a box of Lucky Charms. The company actually uses these terms so often that the CEO is now only referred to by the abbreviations SRM and HMM. The result is another euphemism: ‘Net price realization’, a term for rising prices used by many food businesses.

Another manufacturer of stealth tactics is to keep the price of a given product stable, but reduce the package size slightly and thus increase the price per ounce.

Of course, corporate double talk is not new. For years, layoffs have been referred to as ‘right size’, ‘rationalization of the number of people’ or ‘reduction of power’, and businesses offer ‘synergy’ and ‘solutions’, not products or services.

However, customers may respond to higher prices with a few words of their own.

© 2021 Bloomberg LP Distributed by Tribune Content Agency, LLC


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