The Wall Street Journal reports that while the prices of fresh foods in the nation's supermarkets have been coming down from inflation-fueled highs, center store prices for CPG brands continue to "stubbornly" rise.
"The middle of the store stocks items that can sit on shelves without going bad quickly, from cereal to cookies, paper towels to dish soap - all essentials that consumers can’t really put off buying," the Journal writes. "Prices for potato chips rose an average 17% to $3.05 per package for the 52 weeks ended May 27, compared with the previous year, according to NielsenIQ, a market-research firm. Mayonnaise increased 23% to $4.93 per container. Applesauce jumped 22%.
"The chief executives of the country’s major retailers aren’t happy. They are resisting further price increases from the nation’s packaged-food giants or pushing for lower prices - but the process is taking longer than they had hoped."
The Journal writes that "the persistent price increases for pantry staples are weighing on consumers and limiting their spending on other goods and services needed to power the American economy as people prioritize buying food and other necessities. Two major industries - retailers and producers of consumer packaged goods - have been locked in a power struggle, with retailers throwing their muscle at suppliers to control prices, and suppliers trying to restore or protect their profit margins."
- KC's View:
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In some ways, retailers ought to see this as an opportunity to innovate around fresh foods and point out when and how they can replace CPG items in a way that is more healthful for shoppers.
The fact is that most retailers carry all the same CPG items - there is very little variance from store to store. But if retailers are smart - and aggressive - they can compete more effectively by differentiating in their perimeter/fresh food departments.
If manufacturers won't lower the price of potato chips, then use the potatoes in your produce department and make your own. Same goes for applesauce. There have to be tons of opportunities to compete effectively with recalcitrant manufacturers, but retailers have to be surgical and dedicated to taking advantage of the moment.
