Are price freezes and pledges worthwhile in inflationary climates?
In a response to inflation concerns, Old Navy has instituted a “Price ON-Lock” initiative that will pause price increases on kids’ basics apparel through the back-to-school selling season. For its part, Aldi has pledged to be the local low-price leader.
The moves come as the rate of U.S. inflation leaped to 40-year high of 8.5 percent in March.
“Our customers, and parents in particular, are feeling the pressures of inflation and we want to assure them that they can outfit their children for summer and back-to-school with our everyday kids fashion essentials at a guaranteed price and value,” Andres Dorronsoro, Old Navy’s SVP and head of merchandising, said in a statement attained by Today.
The program applies to Old Navy’s broad “Everyday Magic” essentials range and will be valid through the end of September. The “Everyday Magic” kids’ section features $5 tees, $10 shorts and $8 activewear tops and bottoms.
KMPG last year found that average spend per student for back-to-school would reach $268, compared to $247 in 2020, in part attributed to inflation. Inflationary pressures have intensified over the last year due to rising logistics, raw material, labor and energy costs.
Grocery prices have been particularly impacted, rising 7.9 percent higher year-over-year as of February 2022, according to the Consumer Price Index’s most recent data.
On April 12, Aldi U.S. CEO Jason Hart penned a “Price Promise” letter to consumers pledging to keep prices low.
“Saving you money is what we do best,” he wrote. “And in times like these, I’m incredibly proud to underscore this commitment to you: no matter what happens in the world around us, Aldi will always be the low-price leader in every community we serve.”
Mr. Hart concluded, ”Whether you’re feeling the pinch at the gas pump or on your home energy bills, you can count on ALDI as a bright spot in your weekly budget.”
A survey of Americans from CNBC and Acorns Invest taken in late March found 75 percent worried that higher prices will force them to rethink their financial choices in the coming months and 48 percent thinking about rising prices all the time.
- Old Navy won’t be raising the prices of kids’ clothing anytime soon — here’s why – Today
- Old Navy Promises Not to Raise Prices Through 2022 Back-to-School Season – Fatherly
- Old Navy Will Temporarily Halt Price Increases on Kids’ Apparel as Inflation Hits Parents’ Wallets – Footwear News
- Back-to-school 2021 season will see spike in spending, with permanent shift in consumer patterns – KPMG
- Our Price Promise. – Aldi
- Amid rising inflation, Aldi reiterates low price pledge – Supermarket News
- Inflation fears force Americans to rethink financial choices, CNBC and Acorns survey says – CNBC
DISCUSSION QUESTIONS: Which do you think will resonate more with customers: Old Navy’s price freeze or Aldi’s low-price pledge? Should other retailers embrace similar approaches or is there other messaging around inflation that is more effective?