Consumers Facing “Airline Pricing” On Everyday Items

Rising labor, shipping and production costs — coupled with ongoing COVID-19-related shortages — have led retailers to raise prices on everyday items, often multiple times a day.

As The Wall Street Journal reported Friday (Feb. 4), the price hikes are happening offline and online, particularly among smaller retailers who have been hesitant to spend on costly technology or worried about frustrating their customers.

“There have been more times than not where we’re almost just breaking even on products because of failure to be able to update the pricing,” Jeff Wachenfeld, who manages two True Value hardware stores on Long Island, told the Journal.

The Journal also spoke to Quicklizard Ltd., which makes software to help retailers automate pricing strategies. They say they’ve seen 75% of the roughly 100 retailers using its platform increase how frequently they update prices in the past year. Nearly a third of these retailers are altering their prices more than once a day.

These pricing strategies are common for larger retailers like Amazon and Walmart, who use them to compete with other businesses while keeping their margins protected. Airfares are subject to change with each web search, and gas stations routinely update their prices throughout the day based on supply and demand.

But shoppers at supermarkets or hardware stores expect to find more stable prices and know when they’ve changed. Daily price changes aren’t common, as they require too much manpower or require technology retailers can’t always afford.

“As a retailer, what I really care about is loyalty,” Brian Elliott, a partner at the management consulting firm McKinsey & Co., told the Journal. “If the customer feels ripped off, they’re not going to come back to my store.”

Read more: Retailers Face Post-Holiday Reality of Rising Prices, Decreased Spending

This news comes one week after the Commerce Department reported that personal spending dropped 0.6% from November, ending a six-month streak of gains in December, alongside a slight 0.3% month-on-month increase in personal incomes.

At the same time, the PCE Index (personal consumption expenditures) jumped 5.8%, a level last seen in the early 1980s, with consumers spending less on goods and more on services to close 2021 on a low note.

The data showed that the cutbacks were most pronounced in recreational goods and vehicles, as well as in other nondurable goods, like newspapers, household supplies, games and toys, furnishings and household equipment.