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At a virtual meeting in December, Whole Foods implored suppliers to lower costs on packaged groceries as inflation moderates.
According to The Wall Street Journal, Whole Foods SVP of merchandising Alyssa Vescio told vendors, “We know our customers are weighing the impacts of inflationary pressures on their buying choices.”
Walmart, according to Reuters, has warned major packaged goods makers against additional price increases. Rod Little, CEO of Schick razor maker Edgewell Personal Care, told Reuters, "Because the consumer is now under more pressure, and Walmart is under pressure, that sets up a dynamic where there's probably not a lot of pricing going forward."
According to a Washington Post article, retailers are asking vendors for proof they need to keep prices high or risk finding their product orders canceled or receiving poor shelf placement and being less promoted. The report indicated mainstream food sellers are increasingly concerned about losing share to Aldi, Dollar General and other grocery product discounters.
Bobby Gibbs, a partner at Oliver Wyman, told the Post, “In the last few months, we’ve seen the shift away from trying to fight cost increases to pushing for [vendor] cost decreases.”
Recent surveys and retailer comments on quarterly calls indicate consumers are buying fewer items, seeking discounts and opting for in-house brands amid escalating inflation.
Inflation has slowed in recent months but remains three times higher than the Federal Reserve’s target rate. Grocery inflation has come down at a slower rate.
Prices for freight, cardboard and polypropylene resin — a common plastic used in packaging — have dropped, but wages and other raw material prices remain elevated. Unilever, Nestle, Procter & Gamble, Kimberly Clark and Colgate are among those planning to increase prices at least in the first half to offset costs, despite many seeing lower volumes.
“Cost inflation is going to remain a key theme in 2023,” Graeme Pitkethly, Unilever’s CFO, told analysts last week on a quarterly call. “We successfully managed the trade-offs between price, margin and competitiveness across 2022 and are confident that we can continue to manage these relationships dynamically as the cost landscape evolves through the year.”
- Whole Foods Asks Suppliers to Lower Prices – The Wall Street Journal
- Walmart pushes back as major product suppliers ask for higher prices – Reuters
- Stores are pushing vendors to cut prices, but your bill will stay the same – The Washington Post
- Despite Easing Inflation, American Consumers Proceed with Caution – Shopkick/PRWeb
- Shoppers to Face Fresh Price Hikes as Stores, Suppliers Pass on Costs – Reuters
- Amid food inflation, more shoppers turn to dollar stores for groceries – CNBC
- Big Brands Keep Raising Prices, With Limited Shopper Resistance – The New York Times
- Unilever PLC (UL) Q4 2022 Earnings Call Transcript – Seeking Alpha
- Procter & Gamble revenue and profit fall as company looks to higher prices to offset declining sales – CNBC
- Nestle to hike food prices further in 2023, CEO says – Reuters