We have seen lots of “stealth” price increase already. These are of the variety of 32 oz to 30 to 28 now 25 oz packages. So you get a 15-20% increase but the retail remains the same.

Most of the CPG makers today are lean and mean and well-managed, so I think the price increases will stick whether the big box retailers like it or not. Price increases may be highly scrutinized now, but inevitably they are going to go through.

Two different questions. Why should Wal-Mart accept price increases they don’t want? Answer — hard to say. What’s the state of trade relations on prices? I’m not sure I even understand the question, but I think the answer is those with the least supply chain leverage are forced to live with the tightest margins.

Reality is raising its ugly head, and it’s becoming a day-to-day issue of how much of that reality will be accepted by each party along the value chain. Oil prices are at an all time high (record as of yesterday). Plastics are made from petrochemical feedstocks, and plastic prices are directly linked to oil prices as well as production capacity. Everything, and I do mean everything, links back to this basic fact. Natural fiber apparel prices increase because synthetic fiber prices increase (factories seeking to capture economic benefit). Toys, appliances, housewares….everything dependent on plastic goes up. Period. The actual component costs of most products are primarily in the material (as well as amortized tooling or machine costs). Labor, unfortunately, in most cases, does not represent the largest component of costing, which means that importers, faced with bona fide raw material increases, simply cannot offset those increases by moving to lower cost sources of labor…which means that the importer’s cost of goods IS going up. The simple fact is that buyers are not supposed to accept… Read more »

So Benjamin should have taken that advice all those years ago to go into plastics. Virtually everything we buy today is either made of it or wrapped in it. Nothing is real, least of all prices. What do they really reflect? Do bottom of the supply chain producers actually get paid a living wage? Do customers at the opposite end of the supply chain pay anything that resembles a fair price? Only the middlemen are making money and if one or both ends of the supply chain put their collective foot down, that is going to change once and for all. Certainly British retailers are complaining about poor sales and producers are complaining that they are being squeezed. I read today that Polish producers are also standing up against supermarkets who they feel are inflicting undue pressure on prices. In China and Russia and probably other countries supplying Western retailers and manufacturers, lots of people are making lots of money but even more people are not improving their standard of living a great deal at… Read more »

Bernice, if you think consumers will switch from disposable diapers and start washing their own cloth diapers……click your heels twice and you’ll be in Kansas!

Les – My point was that people WON’T wash their own diapers, they will simply instigate yet another transition from manufacturing and retailing (disposables) to service industry (someone else to do the job for you). Whatever difference in cost there is will be more than made up by the demand for continuing convenience, who cares who does the work? Actually, thinking it through further, it could even result in increased employment for low-paid immigrants either legal or not.

Really the only time a retailer should accept higher prices is when the vendor threatens to stop doing business with the retailer at all because of not getting a good enough price. And, in that scenario, the vendor should be prepared to be undersold by a competitor.