US retail giant Walmart is reportedly striking back at CPG makers following a series of price hikes to counter inflationary cost pressures.
In an interview with the news agency. ReutersRod Little, chief executive of razor maker Schick Edgewell Personal Care Co., said “it’s going to be very difficult” to pass more price increases on to retailers.
Meanwhile, Burt Flickinger, managing director of retail consultancy Strategic Resource Group, said Reuters that “retailers like Walmart will say ‘hey, you already had three rounds of price increases last year, why give us another one?’”
Little was quoted as saying: “[Walmart] He told us, ‘From here, our consumer is challenged, we’re going to take care of consumers, so you’ll have to have very good reasons if you’re going to raise prices from here.’
“Because the consumer is under more pressure now, and Walmart is under pressure, that sets up a dynamic where there probably won’t be a lot of pricing going forward.”
just food has reached out to Walmart for comment as the retailer was not directly quoted in the Reuters’ report. The publisher said that Walmart had not responded to a request for comment at the time of writing.
The possible backlash from retailers to a series of price hikes by food manufacturers to recover costs has come under scrutiny by many analysts in recent conference calls with growers. However, most, including Unilever last week, continue to argue that they are seeing limited elasticities to price increases, even though consumer demand for private label products has been gaining ground.
However, volumes from feed manufacturers have been affected. Unilever, for example, clarified last week that it raised prices 11.3% in 2022 and 13.3% in the fourth quarter alone. But volumes fell 2.1% over the 12 months.
Addressing analysts last week, Unilever’s chief financial officer Graeme Pitkethly said “price growth” is expected to remain “elevated” in the first half of fiscal 2023, adding to the fact that until the to date the elasticities in the group’s operations “remain stable”.
Mondelez International was another foodmaker that emphasized limited price elasticities, though the sweets and confectionery company has encountered “customer disruption” in Europe.
Its CFO, Luza Zaramella, said in early February that despite a “small increase in elasticity” in the fourth quarter, the “European consumer has continued to hold up well and preference for snacks and trusted brands remains strong. with levels of elasticity below normal”.
He added: “In addition to the benefits of our price execution, the consumer remains resilient and elasticity continues to be well below normal levels.”
As early as last summer, the major US food chain Kraft Heinz stopped supplies to Tesco in the UK due to a price dispute.
Then, in January, Tesco Chairman John Allan, speaking in an interview with the BBCit drew the ire of the food industry by suggesting that manufacturers may be taking advantage of the inflationary environment to raise prices.
Allan said Tesco had “fallen out” with several suppliers after “heavy” discussions over price requests that the supermarket had disputed.
The Tesco leader told the broadcaster that the company had “fallen out” with several food suppliers after “heavy” discussions over price requests which the supermarket refused to honor.
The statement sparked outrage among stakeholders and was discredited by various industry bodies.
In response, Minette Batters, president of the UK’s National Farmers Union (NFU), said she was “slightly taken aback” by Allan’s comments, saying “it was almost like I was living in a parallel universe.”
Provision Trade Federation CEO Rod Addy accused the Tesco boss of “saber rattling”.
Industry bodies responded after Tesco chairman’s comments about rising food prices