After years of unbridled consumer spending on everything from home improvement to dream vacations, some companies are now finding the limits of their pricing power.
Shipping giant FedEx last week said customers have shied away from speedier, pricier shipping options. Airlines including Southwest discounted off-peak fares in the fall. The likes of Target and Cheerios maker General Mills have cut their sales outlooks as more consumers watch their budgets.
It’s a shift from the recent years when consumers spent at a breakneck pace — and at high prices — lifting corporate revenues to new records. But faced with weakening demand, more price-sensitive consumers, easing inflation and better supply, some sectors are now forced to find profit growth without the tailwind of price hikes.
The answer across industries has been to cut costs, whether it’s through layoffs or buyouts, or simply becoming more efficient. Executives have spent the past several weeks selling these cost-cutting plans to Wall Street.
As a high level…what did these companies expect to happen when wages are stagnant, layoffs occur, and prices increased?
They become the root cause of prices people can’t afford at that point, and then wonder why sales are declining.
BuT MaH InFiNiTe GrOwTh!¡!