WEBVTT - Why You Will Be Paying More for Everyday Items

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<v Speaker 1>It's Friday, October twenty nine. I'm Oscar Emires from the

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<v Speaker 1>Daily Dive podcast in Los Angeles, and this is reopening America.

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<v Speaker 1>Do you were of higher prices for everyday items? You'll

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<v Speaker 1>be paying more for everything from coffee to toilet paper,

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<v Speaker 1>and big companies are betting that you'll keep paying those prices.

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<v Speaker 1>Procter and Gamble, nest Lee, Verizon, and others all planet

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<v Speaker 1>continue raising prices and push customers to more expensive products

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<v Speaker 1>well into two. This is all to help offset the

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<v Speaker 1>growing costs of the supply chain crisis. Sharon Turlip, consumer

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<v Speaker 1>products reporter at the Wall Street Journal, joins us for

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<v Speaker 1>why companies think you'll stick with them as things get

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<v Speaker 1>more expensive. Thanks for joining us, Sharon, sure, thanks for

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<v Speaker 1>having me. Let's talk about higher prices coming to consumers.

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<v Speaker 1>US companies right now are are actually betting that shoppers

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<v Speaker 1>are going to keep paying these higher prices. You kind

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<v Speaker 1>of have no choice in some cases, but you know,

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<v Speaker 1>a lot of these companies are saying, you know, are

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<v Speaker 1>consumers are gonna stick with us, They're gonna keep doing it.

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<v Speaker 1>And we know this because they're telling their investors to

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<v Speaker 1>expect revenue growth even as they continue to do this. So, um, Sharon,

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<v Speaker 1>tell us what's going on, because we've seen obviously the industry,

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<v Speaker 1>all the industries be deeply impacted by supply chain issues inflation,

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<v Speaker 1>but these companies are still thinking that consumers are going

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<v Speaker 1>to keep up with these higher prices. Sure. Yeah. And

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<v Speaker 1>what we're seeing is the biggest companies, so the biggest

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<v Speaker 1>makers of food, household products, restaurant chains, cell phone companies.

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<v Speaker 1>There's two things that are going on. They have the

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<v Speaker 1>most recognizable brands, so there's a lot of demand for

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<v Speaker 1>their brands, especially when you look at household products and

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<v Speaker 1>what people gravitate to in times of kind of crisis

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<v Speaker 1>and hardships. And these are companies that have the ability

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<v Speaker 1>to work around or through some of these supply chain

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<v Speaker 1>issues that some of their smaller rivals just just can't do.

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<v Speaker 1>And so what kind of price increases are we seeing

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<v Speaker 1>because and for what products specifically? I know it's home products, razors,

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<v Speaker 1>things like that. As you mentioned some of the big companies.

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<v Speaker 1>Nestle is obviously raising prices of coffee. You know a

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<v Speaker 1>lot of people are spending more time at home. So

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<v Speaker 1>what kind of products, what kind of price increases are

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<v Speaker 1>we seeing So we're seeing two things, but one thing

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<v Speaker 1>is just price increases, so the same product now cost more,

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<v Speaker 1>and we're seeing that around almost every household package food item,

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<v Speaker 1>be a toilet, paper, diapers, razors, face cream, coffee, candy, snacks.

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<v Speaker 1>And then what we're also seeing is these companies are

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<v Speaker 1>confident that people are willing to pay more for better products.

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<v Speaker 1>So you know, if you look at the cell phone carriers,

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<v Speaker 1>they're saying, well, we're just going to offer more premium,

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<v Speaker 1>high end packages, and that's how we're going to get

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<v Speaker 1>higher prices. So they're actually giving more but expecting that

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<v Speaker 1>consumers have enough extra money that they're going to pay more.

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<v Speaker 1>And the bet is that they think consumers still have

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<v Speaker 1>a lot of extrac extra cash from things like stimulus payments,

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<v Speaker 1>things that they saved while they were going through the pandemic,

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<v Speaker 1>and even shifting that money to more things at home

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<v Speaker 1>versus going out and going on vacations, eating out all

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<v Speaker 1>that stuff. This is where they say the consumer has

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<v Speaker 1>more money. And the big question though, is when will

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<v Speaker 1>shoppers start seeking out those cheaper items. This is kind

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<v Speaker 1>of that gamble right now. It's definitely a gamble. I mean,

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<v Speaker 1>I think particularly you know, Practor and Gamble tends to

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<v Speaker 1>sell higher and items. One of their hot sellers is,

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<v Speaker 1>you know, a three electric toothbrush. So it's products that

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<v Speaker 1>have more features but also are quite expensive. And you know,

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<v Speaker 1>there's the same thing that's causing the supply chain problems.

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<v Speaker 1>People are spending their money on things as opposed to services.

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<v Speaker 1>So that's why, you know, that's why everything's caught up

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<v Speaker 1>in shipping. But it also means that people are willing

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<v Speaker 1>to pay some on Wall Street. You know, you're starting

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<v Speaker 1>to see the first kind of you know, a little

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<v Speaker 1>bit of handwringing over you know, yes, but when home

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<v Speaker 1>heating and gas prices and car prices, you know, when

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<v Speaker 1>these all in freest are we going to see an

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<v Speaker 1>end or a kind of a you know, reduction in

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<v Speaker 1>this willingness to spend money. You did speak to a

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<v Speaker 1>few consumers and they all kind of said the same,

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<v Speaker 1>you know, similar thing. I guess, uh really don't have

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<v Speaker 1>a choice. Even those that said, Okay, maybe we will

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<v Speaker 1>start seeking out some cheap right, I'm still said, you

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<v Speaker 1>know what, but I'm probably not going to change my

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<v Speaker 1>habits that much. I'm probably gonna stay loyal to these

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<v Speaker 1>big brands kind of what you were saying at the beginning. Yeah,

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<v Speaker 1>and that's you know, because when consumers cut back, typically

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<v Speaker 1>it's not you know, they don't it's not saving money

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<v Speaker 1>on lautery detergent, you know, it's often bigger expenses and

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<v Speaker 1>when people feel kind of more confined to their homes,

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<v Speaker 1>and this is certainly the phenomenon we've seen in COVID.

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<v Speaker 1>It's like, I want to get the you know, I

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<v Speaker 1>want my clothes to be the softest, you know, I

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<v Speaker 1>want to trust my cleaning products more. I want them

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<v Speaker 1>to smell good. So it's almost counterintuitive and that the

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<v Speaker 1>more kind of stuck at home and the more uncertain

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<v Speaker 1>things things are, the more people are willing to spend

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<v Speaker 1>on these smaller kind of household items. Part of the

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<v Speaker 1>equation two, and I found it pretty interesting, is that

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<v Speaker 1>US grocers, the supermarkets all that they've been insulating consumers

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<v Speaker 1>from some of the price increases too, because obviously the

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<v Speaker 1>companies sell them to the retailers and then the retailers

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<v Speaker 1>set the prices for us. They're getting to the point

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<v Speaker 1>where they're going to start raising those prices as well.

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<v Speaker 1>But there has this been kind of a little safety

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<v Speaker 1>and I guess for the consumers maybe why some people

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<v Speaker 1>haven't noticed it as much. Even that's certainly the case,

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<v Speaker 1>And there's two reasons people haven't noticed. So. First, as

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<v Speaker 1>exactly as you said, the increases that have been around

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<v Speaker 1>maybe in the five percent range that the companies have announced,

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<v Speaker 1>and then the retailers may offset that, so you may

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<v Speaker 1>be seeing increases more one or you know, along the

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<v Speaker 1>line of one or two. And another factor is that

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<v Speaker 1>it takes a long time for these prices to get

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<v Speaker 1>out to the market. So P and G, you know,

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<v Speaker 1>it was much earlier this year announced price increases, they

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<v Speaker 1>only started to take effect in September, So for a

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<v Speaker 1>couple of reasons, consumers haven't seen all these increases yet,

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<v Speaker 1>you know, in their pocketbooks. And the last thing I

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<v Speaker 1>wanted to mention, because technology and artificial intelligence is always looming,

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<v Speaker 1>a lot of these companies know how you shop, so

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<v Speaker 1>it allows them to set this pricing in a much

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<v Speaker 1>more targeted manner. So if they know you're a discount shopper,

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<v Speaker 1>you know, they'll push some of those discounts. If they

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<v Speaker 1>know that you're one that pays full price for things,

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<v Speaker 1>well you're going to continue to keep paying full price

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<v Speaker 1>and probably more. Absolutely, there's variation right down to the consumer.

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<v Speaker 1>And even when it comes to locations, you know, um,

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<v Speaker 1>you know, conventional wisdom might say an urban you know,

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<v Speaker 1>a store in a big city like New York or

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<v Speaker 1>Chicago would have higher prices. However, if you're a store

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<v Speaker 1>in kind of a grocery desert where you know that

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<v Speaker 1>the people don't have any other options in rural America,

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<v Speaker 1>prices also could be higher there. I mean, so it really,

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<v Speaker 1>you know, there's not like a one cost for any item,

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<v Speaker 1>which just varies widely. Sharon Turlip, consumer products reporter at

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<v Speaker 1>the Wall Street Journal, thank you very much for joining us.

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<v Speaker 1>Thank you. I'm Oscar Romeris, and this has been reopening America.

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<v Speaker 1>Don't forget that. For today's big news stories, you can

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<v Speaker 1>check me out on the Daily Dive podcast every Monday

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<v Speaker 1>through Friday. So follow us on I Heart Radio or

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<v Speaker 1>wherever you get your podcast