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Walmart and Chipotle criticized over pricing

Published

7 months ago

8 July, 2024

The three join a growing list of consumer brands grappling with deep customer frustration with high prices — and wariness that prices will only rise further. Many retailers, restaurants and other consumer businesses have seen sales decline as shoppers cut back on spending. Companies are now trying to convince customers they offer the best deals, fueling a surge in discounts, promotions and value meals.

Consumers are fed up with misleading prices, said Jean-Pierre Dubé, a marketing professor at the University of Chicago Booth School of Business. They’ve seen lesser items on the shelves, paid extra fees and felt pressure to tip workers for things they wouldn’t have tipped for in the past.

“We’re reaching a boiling point on this,” he said.

Companies that stock supermarket aisles say consumer perception is distorted. Supermarket prices increased by only 1% last yearaccording to data from the U.S. Bureau of Labor Statistics. But food prices at home have risen more than 24% since May 2019, stretching consumers’ wallets and stoking the anger of companies.

Consumers’ purchasing power has also increased as inflation cools and the labor market remains strong, increasing real hourly earnings for the average private-sector worker, according to BLS data.

Other major costs are adding to Americans’ spending, including electricity and rent, which have both increased over the past 12 months.

“People experience the price of consumer products constantly, and it tends to be a focus of what they can remember buying last,” said David Chavern, president of the Consumer Brands Association, a trade group that represents Coca-Cola, Procter & Gamble and dozens of other consumer packaged goods companies. “But the reality is that what’s happening in the supermarket, in the drugstore, has not been a source of material inflation over the last 12 to 18 months.”

In a May Pew Research Center survey, 62% of U.S. adults said that inflation was “a very big problem in the country today”, a higher percentage than any other issues they were asked about, including illegal immigration, gun violence, violent crime and the federal budget deficit.

That percentage has remained roughly steady even as inflation has cooled. In last year’s Pew survey, 65 percent of Americans said inflation was a very big problem.

Inflation has also become a major talking point in the presidential campaign. Former President Donald Trump blamed the president Joe Bidenwhile Biden accused corporations of greed.

U.S. President Joe Biden delivers remarks on reducing costs for American families during a visit to Goffstown, New Hampshire, March 11, 2024.

Kevin Lamarque | Reuters

Food inflation may be back to pre-pandemic levels, but that hasn’t eased the frustration of Americans who are paying far more for groceries than they did years ago.

Consumers, businesses and the Federal Reserve will get the latest information on inflation on Thursday when the federal government releases its consumer price index for June.

Dianna Campbell, 69, a television producer and consultant in Manhattan, said she had noticed that prices were rising and staying high, whether for laundry detergent or restaurant meals.

“You’re paying more for it, but you’re giving me less, and the quality is worse,” she said.

Campbell isn’t the only consumer upset with inflationary contractionthe practice of cutting the size of an item but not its price.

Over the past year, the term has become a household phrase through references in pop culture and politics. In March, both the Cookie Monster and Biden have criticized shrinkflation by name, the former for reducing the size of his beloved treats and the latter for decimating Snickers bars. (Snickers’ parent company, Mars, has denied skimping on the candy bars.)

Customers saw many other examples on trips to the supermarket.

In a report on inflation, Sen. Bob Casey, D-Pennsylvania, criticized Gatorade for switching from a 32-ounce bottle to a 28-ounce version and keeping the price the same.

Gatorade denies changing its packaging to make a profit. PepsiCo Spokeswoman Andrea Foote told CNBC that the 28-ounce Gatorade bottle has been around for more than a decade and that expanding its distribution was part of the company’s long-term strategy, not a response to the current economic climate.

Retailers also have has been accused of downsizing private label items. WalmartFor example, it cut the number of sheets in its Great Value paper towel rolls from 168 to 120, but it didn’t reduce the price. Company spokeswoman Tricia Moriarty said it’s not shrinkflation because Walmart reformulated the product to make each sheet more absorbent.

Awareness of portion reduction has contributed to the recent backlash against Chipotle. After some customers thought their burrito bowls were smaller, they started filming employees placing their orders and posting the videos on TikTok.

In an interview with Jim Cramer on CNBC “Mad Money” In late May, CEO Brian Niccol said Chipotle had not reduced portion sizes and described TikTok’s trend of filming workers as “a little rude.”

“The whole thing is kind of crazy to me,” he said. “We’ve always said we want to give people great portions. We want to give them what they want.”

Wells Fargo analyst Zachary Fadem tested the theory himself, ordering 75 burrito bowls from eight New York City Chipotle restaurants and weighing them. The weight of the burrito bowls varied based on location, leading the analyst to conclude that consistency was the problem—not shrinkflation.

A customer pays for their food at a Chipotle Mexican Grill restaurant on April 26, 2023 in Austin, Texas.

Brandon Bell | Getty Images

But the feeling of paying more and getting less isn’t just in the minds of consumers. It’s become a common experience as shoppers stock up on groceries and prepare for backyard barbecues.

This 4th of July, for example, customers paid an average of $71.22 for a 10-person barbecue, according to the American Farm Bureau Federation. That’s up 5 percent from last year and 30 percent from 2019.

Wendy’s and Walmart has also recently felt the wrath of consumers worried they might be duped

In late February, the burger chain had to backtrack after CEO Kirk Tanner told investors that Wendy’s would test features as early as 2025 that included “dynamic pricing” — adjusting menu prices to boost demand during slower times of the day. Wendy’s later said it had no plans to raise prices when demand was higher and blamed misleading media reports for the uproar.

A Wendy’s Co. restaurant in the Queens borough of New York City, U.S., on Wednesday, Feb. 28, 2024.

Yuki Iwamura | Bloomberg | Getty Images

More recently, social media users criticized Walmart for its decision to roll out digital shelf labels, high-tech price tags that allow you to quickly and easily change prices. The retailer said last month that it would add the technology to more of its stores and plans to have them in 2,300 locations, or about half of its U.S. footprint, by 2026.

On TikTok, some saw the move as the first step for the country’s largest retailer to use dynamic pricing. similar to Uber’s surge pricing.

Walmart, on the other hand, said the new price tags will cut a tedious task from store employees’ to-do lists. The digital shelf tags are designed to save time, Walmart spokeswoman Cristina Rodrigues said. They have LED lights that flash to guide store employees who are restocking items or to help them find products for a customer’s online order. They eliminate the need for store employees to replace traditional paper tags.

She said Walmart has “no plans to change the frequency or implement different pricing methods.” Rodrigues said all price changes will still be approved by the merchandising team. With the technology, a store associate has to stand in front of the shelf and use a mobile app to increase or decrease the price, she said.

Dubé, of the University of Chicago, said the resistance stems from years of consumers feeling cheated by price increases.

“The knee-jerk reaction from consumers is, ‘This seems like another unfair thing that companies are going to do to try to cheat us,'” he said. “The assumption is that this is just another attempt to hurt them.”

But he added that dynamic pricing could have an upside if restaurants and retailers follow suit. Prices can go down as well as up, he said. In Europe, for example, some supermarkets cut prices later in the day to speed sales of baked goods or perishable items and reduce food waste. If Wendy’s lowered prices during slower periods, he said customers could actually get cheaper meals.

Customers at a Walmart store in Secaucus, New Jersey, USA, on Tuesday, March 5, 2024.

Gabby Jones | Bloomberg | Getty Images

But consumers don’t have to wait much longer to start seeing lower prices.

As foot traffic declines for retailers and restaurants, some are leaning into value to bring customers back. In recent months, Target, McDonaldsAldi and others have intensified price cuts and launched new offers for customers.

Walmart said it reduced prices on nearly 7,000 items across its grocery categories in the first quarter of the year. AmazonasCompany-owned Whole Foods has cut prices over the past six months on about 25 percent of its items, including nearly 900 of its private-label items. And a number of fast-food chains, from McDonald’s to Starbucks to Burger King, have recently unveiled new value meals to boost sales.

Consumer packaged goods companies are also reversing course as their volumes decline and investors worry about slow sales. During Covid, companies like Mondelez paused promotions while they focused on meeting demand and dealing with supply chain issues.

But now Mondelez is one of the companies trying to lure consumers back with lower prices. The snack company, which makes Oreos and Clif bars, is expecting a challenging year for its U.S. business as lower-income consumers buy its cookies and crackers less frequently. Mondelez executives said in June that they are planning promotions for brands like Chips Ahoy!, which tend to lose ground to cheaper private-label options. The company has also cut prices on some of its larger package sizes.

“The top priority is really to continue to grow the company and continue to generate volume growth,” Mondelez CFO Luca Zaramella said at the Evercore ISI Consumer & Retail Conference last month.

Krogerwho sells many of these items, also noticed this trend.

Kroger CEO Rodney McMullen said on a mid-June earnings call that brands are spending more of their own money to offer discounts to customers and drive more volume. And he said the level of promotions is similar to pre-pandemic.

It remains to be seen whether companies can contain consumer outrage as offers and discounts begin to take effect.

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News

Breakfast on Wall Street: The Week Ahead

Published

6 months ago

14 July, 2024

FinCrypto Staff

The spotlight next week will shift somewhat to the Federal Reserve’s second-quarter earnings season and monetary policy. Market watchers will be treated to results from several major names, including Dow 30 components Goldman Sachs (GS), UnitedHealth (UNH), Johnson & Johnson (JNJ) and American Express (AXP), along with streaming giant Netflix (NFLX).

The Fed will still attract some attention as investors will be eager to hear from a packed lineup of central bank speakers just before the policy meeting lockout period.

In terms of the economic calendar, after fifteen days of labor market and inflation indicators, activity data will gain momentum in the form of the latest retail sales and industrial production reports.

Earnings Highlight: Monday, July 15 – Goldman Sachs (GS) and BlackRock (Black). See the full earnings calendar.

Earnings Highlight: Tuesday, July 16 – UnitedHealth (UNH), Bank of America (BAC), Progressive (PGR), Morgan Stanley (IN), PNC Financial (PNC) and JB Hunt Transport (JBHT). See the full earnings calendar.

Earnings Highlight: Wednesday, July 17 – Johnson & Johnson (JNJ), US Bancorp (USB), Morgan Children (KMI), United Airlines (UAL) and Ally Financial (ALLY). See the full earnings calendar.

Earnings Highlight: Thursday, July 18 – Netflix (NFLX), Abbott Laboratories (ABT), Black stone (BX), Domino’s pizza (ZDP) and Taiwan Semiconductor Manufacturing (TSM). See the full earnings calendar.

Earnings Highlight: Friday, July 19 – American Express (AXP), Halliburton (THANKS) and Travelers (VRT (return to recoverable value)) See the full earnings calendar.

IPO Observation: Hospital and healthcare clinic operator Ardent Health Partners (TARDT), insurance service provider Twfg (TWFG) and the biotechnology company Lirum Therapeutics (LRTX) are expected to price their IPOs and begin trading next week. The analyst quiet period ends at Rectitude (RECT) to free up analysts to publish ratings.

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Trump shooting: Gold could hit record high, dollar and cryptocurrencies set to jump

Published

6 months ago

14 July, 2024

FinCrypto Staff

Police cars outside the residence of Thomas Matthew Crooks, the alleged shooter at a Trump rally on Saturday, investigate the area in Pennsylvania. In the aftermath of the incident, one rally attendee was killed, two rally attendees are in critical condition and Donald Trump suffered a non-fatal gunshot wound. The shooter is dead after being killed by the United States Secret Service. (Photo by Kyle Mazza/Anadolu via Getty Images)

Police cars outside the residence of Thomas Matthew Crooks, the suspected shooter at a Trump rally on Saturday, investigate the area in Pennsylvania. Following the incident, one rally attendee was killed, two rally attendees are in critical condition and Donald Trump suffered a non-fatal gunshot wound. The shooter is dead after being shot dead by the United States Secret Service. (Photo by Kyle Mazza/Anadolu via Getty Images)

Investors will initially favor traditional safe-haven assets and may lean toward trades more closely tied to former President Donald Trump’s chances of winning the White House after he survived an assassination attempt, according to market watchers.

“There will undoubtedly be some protectionist or safe-haven flows into Asia early this morning,” said Nick Twidale, chief market analyst at ATFX Global Markets. “I suspect gold could test all-time highs, we’ll see the yen being bought and the dollar, and flows into Treasuries as well.”

Early market commentary suggested Trump’s shooting at a rally in Pennsylvania on Saturday could also prompt traders to increase his likelihood of success in the November election. His support for looser fiscal policy and higher tariffs is generally seen as likely to benefit the dollar and weaken Treasuries.

An indicator of market sentiment heading into the weekend: Bitcoin surged above $60,000, likely reflecting Trump’s pro-crypto stance.

Other assets positively linked to the so-called Trump trade include stocks of energy companies, private prisons, credit card companies and health insurers.

Traders will also be closely watching market measures of expected volatility on Monday, such as those in the tariff-sensitive Chinese yuan and Mexican peso, which have begun to price in the U.S. vote.

Trump said he was shot in the right ear after a shooting at his rally. His campaign said in a statement that he was “fine” after the incident, which prompted him to rush off the stage.

“Currencies will be the first major market on Monday in Asia to react to the weekend’s shots. There’s potential for extra volatility, and getting a clear reading could be especially difficult because liquidity will be hurt by Japan’s national holiday,” said Garfield Reynolds, Asia team leader for Bloomberg Markets Live.

Strategists had already expected a volatile run-up to the election, particularly as Democrats are still agonizing over President Joe Biden’s candidacy after his poor performance in last month’s debate raised questions about his age. Investors were also grappling with the possibility that the election could end in a drawn-out dispute or political violence.

But there is little precedent for events like those in Pennsylvania. When President Ronald Reagan was shot four decades ago, the stock market plunged before closing early. The next day, March 31, 1981, the S&P 500 rose more than 1% and benchmark 10-year Treasury yields fell 9 basis points to 13.13%, according to data compiled by Bloomberg.

Bond investors should pay particular attention as the attack is likely to boost Trump’s election chances and ultimately lead to concerns about the fiscal outlook, according to Marko Papic, chief strategist at California-based BCA Research Inc.

“The bond market must at some point become aware of President Trump’s greater chances of winning the White House than any of his rivals,” Papic wrote. “And I continue to believe that as his chances increase, so too must the likelihood of a bond market revolt.”

Kyle Rodda, senior financial markets analyst at Capital.com, said he was seeing client flows into Bitcoin and gold following the shooting.

“This news marks a turning point in American policy norms,” he said. “For markets, it means safe-haven trades, but more tilted toward non-traditional safe-havens.”

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News

Latest Business News Live Updates Today, July 11, 2024

Published

6 months ago

14 July, 2024

FinCrypto Staff

Latest Business News Live Updates Today, July 11, 2024

Follow us for stories on Bill Gates, Elon Musk, Mukesh Ambani, Gautam Adani as we bring you everything that’s happening in the business world. Follow the latest gold and silver prices here too. Stay in the know on all things business with us.

Latest news on July 11, 2024: Airtel says its new Xstream Fiber plans bundle over 350 live TV channels (Official Photo) (Reuters) Disclaimer: This is an AI-generated live blog and has not been edited by Hindustan Times staff.

Follow all the updates here:

Thu, 11 Jul 2024 08:44 PM

Business News LIVE Updates: Decoding Airtel’s new Xstream Fiber packages, finding value with Live TV and OTT
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Business News LIVE Updates: TCS Q1 results meet estimates: Net profit up 9%, ₹10 dividend declared
- TCS’s consolidated revenue rose 5.4% to Rs 626.13 billion in the June quarter. Analysts had expected revenue of Rs 622.07 billion, as per LSEG data.
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Business News LIVE Updates: Indian companies falsified generic Viagra data to get approval, says US FDA: Report
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News / Business / Latest Business News Live Updates Today, July 11, 2024

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Jio Financial share price: Should you buy this Reliance group stock on Monday ahead of Q1 FY2024 results?

Published

6 months ago

14 July, 2024

FinCrypto Staff

Jio Financial share price: Should you buy this Reliance group stock on Monday ahead of Q1 FY2024 results?

Q1 2024 Results: Jio Financial Share Price will be in focus on Monday as the Reliance Group company has a fixed board meeting on July 15, 2024 to consider and approve the company’s unaudited standalone and consolidated financial results. Trust Group company informed about the Q1 2024 Results date on Wednesday last week via an exchange filing. According to stock market experts, Jio Financial Services Limited is poised to deliver impressive Q1 results for FY25 on solid operating income. They have forecast a healthy QoQ PAT for the company in Q1 FY25.

Jio Financial Services News

Speaking on the Jio Financial Services Q1 2024 results, Manish Chowdhury, Head of Research, StoxBox, said, “We believe Jio Financial Services is poised to deliver impressive results in Q1FY25 aided by its operating income, which is likely to show robust growth driven by strong investment income, which in turn should lead to healthy PAT growth on a sequential basis. Jio Financial Services continues to make strategic moves such as launching digital products and expanding its ecosystem, with a clear focus on future growth. The company has announced plans to introduce products for lending against stocks and mutual funds, leveraging Jio’s large user base, which could be a significant growth driver in the coming quarters.”

“Furthermore, with the NBFC receiving RBI approval to become a primary investment company, Jio Financial Services is well-positioned to unlock value from its investments. Overall, we expect the company to report robust numbers in the upcoming quarter,” the StoxBox expert added.

Jio Financial Stock Target Price

Speaking about the technical outlook of Jio Financial share price, Ganesh Dongre, Senior Manager, Technical Research at Anand Rathi, said, “Jio Financial Services share price is poised to make a fresh high at the ₹260 apiece level. If the stock breaks above this mark, the Reliance Group stock could make a fresh high by touching the ₹290-₹295 zone. Hence, those with Jio Finance stock in their portfolio are advised to stick to the script by keeping a stop loss at ₹205. If the stock breaks above ₹260 decisively, then one can upgrade the stop loss at ₹240 for the near-term target of ₹295.”

On the advice to new buyers regarding Jio Financial stock, Ganesh Dongre said, “New buyers are advised to wait for the breakout. Once the stock breaks above ₹260, one can buy this Reliance Group stock at the short term target of ₹295, keeping a stop loss of ₹240 apiece.”

Disclaimer: The views and recommendations made above are those of individual analysts or brokerage firms, and not of Mint. Investors are advised to consult with certified experts before making any investment decisions.

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