Speaker 1: It's Friday, October twenty nine. I'm Oscar Emires from the
Speaker 1: Daily Dive podcast in Los Angeles, and this is reopening America.
Speaker 1: Do you were of higher prices for everyday items? You'll
Speaker 1: be paying more for everything from coffee to toilet paper,
Speaker 1: and big companies are betting that you'll keep paying those prices.
Speaker 1: Procter and Gamble, nest Lee, Verizon, and others all planet
Speaker 1: continue raising prices and push customers to more expensive products
Speaker 1: well into two. This is all to help offset the
Speaker 1: growing costs of the supply chain crisis. Sharon Turlip, consumer
Speaker 1: products reporter at the Wall Street Journal, joins us for
Speaker 1: why companies think you'll stick with them as things get
Speaker 1: more expensive. Thanks for joining us, Sharon, sure, thanks for
Speaker 1: having me. Let's talk about higher prices coming to consumers.
Speaker 1: US companies right now are are actually betting that shoppers
Speaker 1: are going to keep paying these higher prices. You kind
Speaker 1: of have no choice in some cases, but you know,
Speaker 1: a lot of these companies are saying, you know, are
Speaker 1: consumers are gonna stick with us, They're gonna keep doing it.
Speaker 1: And we know this because they're telling their investors to
Speaker 1: expect revenue growth even as they continue to do this. So, um, Sharon,
Speaker 1: tell us what's going on, because we've seen obviously the industry,
Speaker 1: all the industries be deeply impacted by supply chain issues inflation,
Speaker 1: but these companies are still thinking that consumers are going
Speaker 1: to keep up with these higher prices. Sure. Yeah. And
Speaker 1: what we're seeing is the biggest companies, so the biggest
Speaker 1: makers of food, household products, restaurant chains, cell phone companies.
Speaker 1: There's two things that are going on. They have the
Speaker 1: most recognizable brands, so there's a lot of demand for
Speaker 1: their brands, especially when you look at household products and
Speaker 1: what people gravitate to in times of kind of crisis
Speaker 1: and hardships. And these are companies that have the ability
Speaker 1: to work around or through some of these supply chain
Speaker 1: issues that some of their smaller rivals just just can't do.
Speaker 1: And so what kind of price increases are we seeing
Speaker 1: because and for what products specifically? I know it's home products, razors,
Speaker 1: things like that. As you mentioned some of the big companies.
Speaker 1: Nestle is obviously raising prices of coffee. You know a
Speaker 1: lot of people are spending more time at home. So
Speaker 1: what kind of products, what kind of price increases are
Speaker 1: we seeing So we're seeing two things, but one thing
Speaker 1: is just price increases, so the same product now cost more,
Speaker 1: and we're seeing that around almost every household package food item,
Speaker 1: be a toilet, paper, diapers, razors, face cream, coffee, candy, snacks.
Speaker 1: And then what we're also seeing is these companies are
Speaker 1: confident that people are willing to pay more for better products.
Speaker 1: So you know, if you look at the cell phone carriers,
Speaker 1: they're saying, well, we're just going to offer more premium,
Speaker 1: high end packages, and that's how we're going to get
Speaker 1: higher prices. So they're actually giving more but expecting that
Speaker 1: consumers have enough extra money that they're going to pay more.
Speaker 1: And the bet is that they think consumers still have
Speaker 1: a lot of extrac extra cash from things like stimulus payments,
Speaker 1: things that they saved while they were going through the pandemic,
Speaker 1: and even shifting that money to more things at home
Speaker 1: versus going out and going on vacations, eating out all
Speaker 1: that stuff. This is where they say the consumer has
Speaker 1: more money. And the big question though, is when will
Speaker 1: shoppers start seeking out those cheaper items. This is kind
Speaker 1: of that gamble right now. It's definitely a gamble. I mean,
Speaker 1: I think particularly you know, Practor and Gamble tends to
Speaker 1: sell higher and items. One of their hot sellers is,
Speaker 1: you know, a three electric toothbrush. So it's products that
Speaker 1: have more features but also are quite expensive. And you know,
Speaker 1: there's the same thing that's causing the supply chain problems.
Speaker 1: People are spending their money on things as opposed to services.
Speaker 1: So that's why, you know, that's why everything's caught up
Speaker 1: in shipping. But it also means that people are willing
Speaker 1: to pay some on Wall Street. You know, you're starting
Speaker 1: to see the first kind of you know, a little
Speaker 1: bit of handwringing over you know, yes, but when home
Speaker 1: heating and gas prices and car prices, you know, when
Speaker 1: these all in freest are we going to see an
Speaker 1: end or a kind of a you know, reduction in
Speaker 1: this willingness to spend money. You did speak to a
Speaker 1: few consumers and they all kind of said the same,
Speaker 1: you know, similar thing. I guess, uh really don't have
Speaker 1: a choice. Even those that said, Okay, maybe we will
Speaker 1: start seeking out some cheap right, I'm still said, you
Speaker 1: know what, but I'm probably not going to change my
Speaker 1: habits that much. I'm probably gonna stay loyal to these
Speaker 1: big brands kind of what you were saying at the beginning. Yeah,
Speaker 1: and that's you know, because when consumers cut back, typically
Speaker 1: it's not you know, they don't it's not saving money
Speaker 1: on lautery detergent, you know, it's often bigger expenses and
Speaker 1: when people feel kind of more confined to their homes,
Speaker 1: and this is certainly the phenomenon we've seen in COVID.
Speaker 1: It's like, I want to get the you know, I
Speaker 1: want my clothes to be the softest, you know, I
Speaker 1: want to trust my cleaning products more. I want them
Speaker 1: to smell good. So it's almost counterintuitive and that the
Speaker 1: more kind of stuck at home and the more uncertain
Speaker 1: things things are, the more people are willing to spend
Speaker 1: on these smaller kind of household items. Part of the
Speaker 1: equation two, and I found it pretty interesting, is that
Speaker 1: US grocers, the supermarkets all that they've been insulating consumers
Speaker 1: from some of the price increases too, because obviously the
Speaker 1: companies sell them to the retailers and then the retailers
Speaker 1: set the prices for us. They're getting to the point
Speaker 1: where they're going to start raising those prices as well.
Speaker 1: But there has this been kind of a little safety
Speaker 1: and I guess for the consumers maybe why some people
Speaker 1: haven't noticed it as much. Even that's certainly the case,
Speaker 1: And there's two reasons people haven't noticed. So. First, as
Speaker 1: exactly as you said, the increases that have been around
Speaker 1: maybe in the five percent range that the companies have announced,
Speaker 1: and then the retailers may offset that, so you may
Speaker 1: be seeing increases more one or you know, along the
Speaker 1: line of one or two. And another factor is that
Speaker 1: it takes a long time for these prices to get
Speaker 1: out to the market. So P and G, you know,
Speaker 1: it was much earlier this year announced price increases, they
Speaker 1: only started to take effect in September, So for a
Speaker 1: couple of reasons, consumers haven't seen all these increases yet,
Speaker 1: you know, in their pocketbooks. And the last thing I
Speaker 1: wanted to mention, because technology and artificial intelligence is always looming,
Speaker 1: a lot of these companies know how you shop, so
Speaker 1: it allows them to set this pricing in a much
Speaker 1: more targeted manner. So if they know you're a discount shopper,
Speaker 1: you know, they'll push some of those discounts. If they
Speaker 1: know that you're one that pays full price for things,
Speaker 1: well you're going to continue to keep paying full price
Speaker 1: and probably more. Absolutely, there's variation right down to the consumer.
Speaker 1: And even when it comes to locations, you know, um,
Speaker 1: you know, conventional wisdom might say an urban you know,
Speaker 1: a store in a big city like New York or
Speaker 1: Chicago would have higher prices. However, if you're a store
Speaker 1: in kind of a grocery desert where you know that
Speaker 1: the people don't have any other options in rural America,
Speaker 1: prices also could be higher there. I mean, so it really,
Speaker 1: you know, there's not like a one cost for any item,
Speaker 1: which just varies widely. Sharon Turlip, consumer products reporter at
Speaker 1: the Wall Street Journal, thank you very much for joining us.
Speaker 1: Thank you. I'm Oscar Romeris, and this has been reopening America.
Speaker 1: Don't forget that. For today's big news stories, you can
Speaker 1: check me out on the Daily Dive podcast every Monday
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