Pricing Trends In An Uncertain Economy

Pricing Trends In An Uncertain Economy

Every day, shoppers walk into a store to find that the price of a favorite item has gone up.  These price increases drove dollar growth for retail sales within food, drug and mass merchandisers to 3.6 percent in the 52-week period ending 1/24/2009, although sales slowed in the last quarter.  Much of that growth, however, was driven by inflationary pricing as both retailers and manufacturers raised prices due to rapidly escalating commodity costs.  Every department – except general merchandise – showed dollar sales growth over the year.

Across 114 categories representing more than 99 percent of all department sales Nielsen monitors, six categories had price increases of greater than 15 percent over a year ago.  38 categories had price increases of 0 percent to 4.9 percent, while 11 had price declines. The top five categories with the largest price increases over the course of the year:

  • Dry vegetables & grains 25%
  • Flour 23%
  • Jams, jellies & spreads (including peanut butter) 19%
  • Car accessories 19%
  • Pet food 16%

Higher commodity prices played a role in all of the food categories, while higher crude oil prices drove increases for motor oil in the car accessory categories.  Meanwhile, the following categories decreased in price:

  • Fresh eggs -12%
  • Milk -8%
  • Candles & Incense -5%
  • Light bulbs and telephone accessories -3%
  • Non-carbonated soft drinks -3%

In the four week period ended January 24, 2009, unit prices across the store were up 5.5 percent – exactly the same as the 2008 Consumer Price Index calculated by the U.S. government.

“U.S. consumers would certainly benefit from lower prices.  But retailers should be careful with how far they push their manufacturer partners to lower prices. If they simply push for lower prices without planning for the right lower prices, they may find it extremely difficult to grow same-store sales this year,” said Todd Hale, Senior Vice President, Consumer & Shopper Insights at Nielsen.

Read the entire article about pricing trends in the lastest edition of Facts, Figures & the Future here.