As retail prices rise, companies use jargon to disguise it

For items such as clothing, cereal, and garbage bags, prices are rising rapidly. But many companies don’t say it, at least not in language most buyers would recognize.

If you ask the maker of Pampers Procter & Gamble Co., it’s not about raising the prices, it’s about “taking the prices.” Rival Unilever, known for Dove Soap and Ax Body Spray, says it has been “very active with pricing.” The prize for creativity – at least so far – has been home improvement retailer Lowe’s Cos., Whose CFO told investors on Wednesday it “elevates our pricing ecosystem.”

Euphemisms illustrate the rhetorical backflips that companies take to avoid saying what they actually do – respond to soaring input and transportation costs, and protect their profit margins, by making their products more expensive. Manufacturers and sellers of consumer staples saw significant inventory gains last year, thanks to pandemic storage, and are now under pressure to maintain that performance even as costs rise, labor markets tighten and they face extremely difficult comparisons with last year’s growth.

These headwinds cooled their stocks somewhat in 2021, with the Standard & Poor’s 500 Consumer Staples index only rising 4.1% this year through Tuesday, and the S&P primary retail index rising by 7%. These both follow the 13% gain of the benchmark S&P 500.

The price tags that consumers see on shelves or online are the result of a complex series of negotiations between sellers and retailers, conducted behind closed doors, with neither side willing to sacrifice too much. Retailers sometimes absorb part of the price increases demanded by manufacturers, and the rest is passed on to buyers. When prices inevitably rise, as they do now, manufacturers and retailers both hide behind neologisms that Wall Street understands, but Main Street sometimes doesn’t.

Take the French yogurt maker Danone, which said it “managed to push a certain price down” when inflation picked up. Campbell Soup Co. said Wednesday it expects “price action” to take effect early in the next fiscal year.

Then there’s grain maker General Mills Inc., whose lingo includes obscure phrases like “strategic revenue management” and “holistic margin management,” which isn’t a language you’ll ever find in the world. back of a box of Lucky Charms. The company uses these terms so often, in fact, that their CEO now refers to them only by the acronyms SRM and HMM. The result is yet another understatement: “Realizing the Net Price,” a term for raising prices that has been used by many food companies.

Another stealth tactic used by manufacturers is to keep the price of a given product stable, but reduce the size of the package slightly, thereby increasing the price per ounce.

Corporate double-talk is not new, of course. For years, layoffs have been referred to as “downsizing”, “downsizing” or “downsizing”, and companies provide “synergy” and “solutions”, not products or services.

Customers, however, might react to the higher prices with a few choice words.


Source link

About Timothy Cheatham

Check Also

Private Investors ‘Celebrate’ Ken Griffin’s Birthday in Their Own Way

In addition to having that “Friday” feeling, retail investors also spent the last day of …

Leave a Reply

Your email address will not be published. Required fields are marked *