Walmart, Chipotle criticized over prices | Real Time Headlines

Inflation may be cooling, but consumer anger over rising prices is growing.

TikTok users criticized Walmart for launching digital shelf labels that allow it to quickly raise and lower prices. Wendy’s changed its tune after its CEO suggested the burger chain might start using dynamic pricing, the practice of raising and lowering prices based on demand. At some Chipotle locations, customers film employees to make sure they don’t skimp on their burrito bowls.

The three brands join a growing list of consumer brands frustrated by high prices and worried they will only rise further. Many retailers, restaurants and other consumer goods companies have seen sales decline as shoppers cut back on spending. Businesses are now trying to convince customers that they offer the best deals, driving an increase in discounts, promotions and value meals.

Jean-Pierre Dubé, a marketing professor at the University of Chicago Booth School of Business, said consumers are tired of deceptive pricing. They see smaller items on the shelves, pay a surcharge, and feel pressured to tip employees for something they haven’t tipped in the past.

“We’ve reached a boiling point on this,” he said.

Companies that stock grocery store shelves believe consumer perceptions are biased. Grocery prices are Up just 1% over the past year, according to the U.S. Bureau of Labor Statistics. But domestic food prices have risen more than 24% since May 2019, straining consumer wallets and sparking anger from businesses.

consumer Purchasing power has also increased As inflation cools and the job market remains strong, average real hourly earnings for private sector workers have improved, according to the Bureau of Labor Statistics.

Other major costs are increased Americans’ expenses, such as electric bills and rent, which have climbed over the past 12 months.

Represents Coca-Cola, Procter & Gamble and dozens of other consumer products companies. “But the reality is, what happened in grocery stores and pharmacies over the past 12 to 18 months is not the source of material inflation.”

A May Pew Research Center survey showed that 62% of U.S. adults Says inflation is “a very big problem in the country today” A higher percentage than anyone else They were asked about issues including illegal immigration, gun violence, violent crime and the federal budget deficit.

Even as inflation cools, the ratio has remained broadly stable. In a Pew Research Center survey a year ago, 65% of Americans said inflation was a very big problem.

Inflation has also become a major issue in the presidential campaign. former president Donald Trump blame the president Joe Bidenwhile Biden blamed corporate greed.

Campbell isn’t the only angry consumer contraction and expansionthe practice of cutting product size rather than price.

Over the past year, the word has become a household phrase through references in pop culture and politics. In March, both sides cookie monster Biden singled out contractionary inflation, which seeks to reduce the size of his beloved snack, and which seeks to destroy Snickers bars. (Mars, the parent company of Snickers, denies saving money on chocolate bars).

There are many other examples that customers see on their way to the grocery store.

In a report on shrinking inflation, Sen. Bob Casey, D-Pa., called on Gatorade to switch from 32-ounce bottles to 28-ounce versions and keep the same price.

Gatorade denies it changes its packaging to make a profit. Pepsi Spokesperson Andrea Foote told CNBC that 28-ounce bottles of Gatorade have been around for more than a decade and that expanding their distribution is part of the company’s long-term strategy rather than a response to the current economic climate.

Retailers also Accused of reducing the size of private label merchandise. WalmartFor example, it reduced the number of sheets in its Great Value paper towel rolls from 168 to 120, but did not lower the price. Company spokesperson Tricia Moriarty said this was not shrinkage and swell because Walmart reformulated the product to make each sheet more absorbent.

Awareness of reduced portions led to recent backlash Chipotle. After some customers thought their taco bowls were on the small side, they began filming workers placing their orders and posting the footage on TikTok.

during an interview Jim Cramer on CNBC “I’m crazy about money” In late May, CEO Brian Niccol said Chipotle was not reducing portion sizes and called TikTok’s trend of filming workers “a little rude.”

“The whole thing is kind of crazy to me,” he said. “We always say we want to give people big portions. We want to give them what they want.”

Wells Fargo analyst Zachary Fadem tested this theory himself when he ordered and weighed 75 burrito bowls from eight Chipotle restaurants in New York City. The weight of burrito bowls varies by location, leading analysts to conclude that the problem is consistency, not shrinkage and expansion.

But the feeling of paying more and getting less doesn’t just exist in the minds of consumers. It’s become a common experience as shoppers stock up on groceries and prepare for backyard barbecues.

Take this year’s Fourth of July as an example. Customers pay an average of $71.22 According to the American Farm Bureau Federation, it can accommodate 10 people for a picnic. A 5% increase over last year and a 30% increase over 2019.

Wendy’s Walmart and Walmart have also been feeling the wrath of consumers recently, fearing they may be being ripped off

In late February, Chief Executive Kirk Tanner told investors that Wendy’s would test features including “dynamic pricing” as early as 2025, such as adjusting menu prices to drive demand during slower times of the day. Then the burger chain had to back down. Wendy’s later said it had no plans to raise prices when demand was highest and blamed misleading media reports for the uproar.

Recently, social media users criticized Walmart’s decision to launch digital shelf labels, high-tech price tags that allow it to quickly and easily change prices. The retailer said last month it would roll out the technology in more stores and plans to have the technology in 2,300 stores, about half of its U.S. stores, by 2026.

On TikTok, some see the move as the first step toward using dynamic pricing to become the largest retailer in the U.S. Similar to Uber’s surge pricing.

Walmart, on the other hand, said the new price tags will remove a tedious task from store workers’ to-do lists. Walmart spokesperson Cristina Rodriguez said digital shelf labels are designed to save time. Their LED lights flash to provide guidance to store staff who are restocking stock, or to help them find products for customers’ online orders. They eliminate the need for store staff to replace traditional paper labels.

Walmart has “no plans to change frequency or implement a different pricing approach,” she said. Rodriguez said all price changes will still be approved by the sales team. With the technology, store workers would have to stand in front of shelves and use a mobile app to raise or lower prices, she said.

The backlash comes from years of shoppers feeling cheated by rising prices, said Dube of the University of Chicago.

“The natural response from consumers is, ‘This sounds like another unfair thing that the company is trying to do to us,'” he said. “Presumably this is just another attempt to screw them up.”

But he added that dynamic pricing could offer a glimmer of hope if restaurants and retailers pursue it. Prices could go down or they could go up, he said. In Europe, for example, some grocery stores mark down prices at the end of the day to speed up sales of baked goods or perishables and reduce food waste. If Wendy’s lowers prices during the off-season, customers can actually get cheaper meals, he said.

As foot traffic declines at retailers and restaurants, some are relying on value to attract customers. Over the past few months, Target, McDonald’sAldi, etc. Strengthen price reductions and launch new offers for customers.

Walmart said it lowered prices on nearly 7,000 items in its food categories in the first quarter of this year. AmazonOver the past six months, Whole Foods has reduced prices by about 25%, including on nearly 900 private-label items. From McDonald’s to Starbucks to Burger King, many fast-food chains have recently launched new value meals to drive sales.

Consumer products companies are also reversing course as sales decline and investors fret about lagging sales. During COVID-19, companies like Mondelez Halting promotions as they focus on meeting demand and dealing with supply chain disruptions.

But now Mondelez is among the companies hoping to re-engage consumers with lower prices. The snack company, which owns Oreos and Cliff’s bars, expects a challenging year for its U.S. business as lower-income consumers buy its cookies and crackers less frequently. Mondelēz executives said in June that they were planning promotions for brands such as Chips Ahoy!, which tend to lose ground to cheaper private-label products. The company has also lowered prices on some larger pack sizes.

“The priority is really to continue to grow the company and continue to grow sales,” Mondelez Chief Financial Officer Luca Zaramella said last month at the Evercore ISI Consumer & Retail Conference.

hook upThose selling many of these items have also noticed the trend.

Kroger Chief Executive Rodney McMullen said on an earnings call in mid-June that the brand was spending more of its own funds to offer discounts to customers and increase sales. Promotion levels are similar to pre-pandemic, he said.

As sales and discounts take hold, it remains to be seen whether companies can quell consumer anger.