Last week we received even more evidence that consumers have reached a limit on what we will pay for things. At the same time, we can see exactly how much money unqualified corporate greed has extracted from our wallets.
The Lineup
The following lineup of stores has announced that they are reducing prices, some permanently and some temporarily (although I suspect the latter will slide right into the former}:
- Aldi
- Amazon
- Arko Corp.
- Giant Food
- Ikea
- McDonald’s
- Michaels
- Target
- Walgreens
- Walmart
Having reached the tipping point, corporations are retrenching from maximum greed but are pitching the lowered prices in the best possible light for them.
Nice Guys and Big Mistakes
Why have price cuts suddenly become a trend? Well, to listen to the CEOs, it’s because they are just such nice guys. They want to help customers who have trouble making ends meet. In other words, they’re doing it for us out of the kindness of their hearts.
Here are a few of their press-release explanations:
“Walgreens understands our customers are under financial strain and struggle to purchase everyday essentials,” — Tracey D. Brown, Walgreens’ retail president and chief customer officer.
“We know consumers are feeling pressured to make the most of their budget, and Target is here to help them save more,” — Target Executive Vice President Rick Gomez-.
“It’s more important than ever to deliver exceptional value for every customer looking to stretch their dollar,” Ashley Buchanan — CEO at Michaels.
This is, of course, bullpucky. Early explanations rang truer. “We made a mistake. We raised prices too high.”
Follow the Money
One simple thing motivates these companies and that’s money: profits, to be specific. Despite the public-relations spin, these companies really did intend to hike prices that high, and they really did plan to hold prices up there as long as they could.
Profits skyrocketed and the executive salaries went right up with them. As a result, the costs of purchasing products have risen 20% to 30% higher than they were three years ago.
This is why Americans think we’re in a recession when, in fact, the U.S.A. has the world’s strongest economy. The economy doesn’t feel strong if prices are bleeding you dry at the supermarket, the big-box store, the gas pump, and the pharmacy.
Also, the economy doesn’t feel strong if high prices ate up the money you were saving (or trying to save) for a vacation, a new car, or a new roof. Ditto for trying to pull together a down payment on a house where the average cost of a home has reached the stratosphere in many parts of the country.
No matter what’s happening at the Federal Reserve or on Wall Street, if the economy isn’t good for you, it isn’t good.
Profits and Deceptions
Now, there’s nothing wrong with making money or with having a big salary—that’s the capitalist model at work. But more than a little deception went on here. Companies blamed inflation for the higher prices while hiding the real story that their price hikes drove most of the inflation.
Source: U.S. Bureau of Economic Analysis
Much of that money went right into the corporate bottom line and the pockets of the already wealthy executive class.
Enough, Already
Finally, consumers reached a point where we just stopped buying non-essential items. I have recommended this tactic in several previous posts because I know the only thing that would get the companies’ attention—and their response—is for the money to stop coming in.
And it’s working.
Because while their profits increased, our salaries stayed pretty flat. When incomes don’t keep up with prices, a gap occurs. And that gap has been growing wider.
I have urged my readers to keep one simple thing in mind: if you don’t need it, don’t buy it. And, even if you need it, try to buy less. Eventually, corporations get the message and are forced to revise their pricing models.
That works in our favor, so keep it up. I predict we will see more headlines about companies dropping their prices—for whatever reason they invent. As long as you understand that their reasons are just wallpaper, you will be able to see behind the PR curtain to the real issue.
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