Why You Will Be Paying More for Everyday Items

growing costs of the supply chain crisis. Sharon Turlip, consumer products reporter at the Wall Street Journal, joins us for why companies think you'll stick with them as things get more expensive. Thanks for joining us, Sharon, sure, thanks for having me. Let's talk about higher prices coming to consumers. US companies right now are are actually betting that shoppers

are going to keep paying these higher prices. You kind of have no choice in some cases, but you know, a lot of these companies are saying, you know, are consumers are gonna stick with us, They're gonna keep doing it. And we know this because they're telling their investors to

expect revenue growth even as they continue to do this. So, um, Sharon, tell us what's going on, because we've seen obviously the industry, all the industries be deeply impacted by supply chain issues inflation, but these companies are still thinking that consumers are going to keep up with these higher prices. Sure. Yeah. And what we're seeing is the biggest companies, so the biggest makers of food, household products, restaurant chains, cell phone companies.

There's two things that are going on. They have the most recognizable brands, so there's a lot of demand for their brands, especially when you look at household products and what people gravitate to in times of kind of crisis and hardships. And these are companies that have the ability to work around or through some of these supply chain issues that some of their smaller rivals just just can't do. And so what kind of price increases are we seeing

because and for what products specifically? I know it's home products, razors, things like that. As you mentioned some of the big companies. Nestle is obviously raising prices of coffee. You know a

lot of people are spending more time at home. So what kind of products, what kind of price increases are we seeing So we're seeing two things, but one thing is just price increases, so the same product now cost more, and we're seeing that around almost every household package food item, be a toilet, paper, diapers, razors, face cream, coffee, candy, snacks. And then what we're also seeing is these companies are confident that people are willing to pay more for better products.

So you know, if you look at the cell phone carriers, they're saying, well, we're just going to offer more premium, high end packages, and that's how we're going to get higher prices. So they're actually giving more but expecting that consumers have enough extra money that they're going to pay more.

And the bet is that they think consumers still have a lot of extrac extra cash from things like stimulus payments, things that they saved while they were going through the pandemic, and even shifting that money to more things at home versus going out and going on vacations, eating out all that stuff. This is where they say the consumer has more money. And the big question though, is when will shoppers start seeking out those cheaper items. This is kind

of that gamble right now. It's definitely a gamble. I mean, I think particularly you know, Practor and Gamble tends to sell higher and items. One of their hot sellers is, you know, a three electric toothbrush. So it's products that have more features but also are quite expensive. And you know, there's the same thing that's causing the supply chain problems. People are spending their money on things as opposed to services. So that's why, you know, that's why everything's caught up

in shipping. But it also means that people are willing to pay some on Wall Street. You know, you're starting to see the first kind of you know, a little bit of handwringing over you know, yes, but when home heating and gas prices and car prices, you know, when these all in freest are we going to see an end or a kind of a you know, reduction in this willingness to spend money. You did speak to a few consumers and they all kind of said the same,

you know, similar thing. I guess, uh really don't have a choice. Even those that said, Okay, maybe we will start seeking out some cheap right, I'm still said, you know what, but I'm probably not going to change my habits that much. I'm probably gonna stay loyal to these

big brands kind of what you were saying at the beginning. Yeah, and that's you know, because when consumers cut back, typically it's not you know, they don't it's not saving money on lautery detergent, you know, it's often bigger expenses and when people feel kind of more confined to their homes, and this is certainly the phenomenon we've seen in COVID. It's like, I want to get the you know, I want my clothes to be the softest, you know, I want to trust my cleaning products more. I want them

to smell good. So it's almost counterintuitive and that the more kind of stuck at home and the more uncertain things things are, the more people are willing to spend on these smaller kind of household items. Part of the equation two, and I found it pretty interesting, is that US grocers, the supermarkets all that they've been insulating consumers from some of the price increases too, because obviously the companies sell them to the retailers and then the retailers

set the prices for us. They're getting to the point where they're going to start raising those prices as well. But there has this been kind of a little safety and I guess for the consumers maybe why some people haven't noticed it as much. Even that's certainly the case,

And there's two reasons people haven't noticed. So. First, as exactly as you said, the increases that have been around maybe in the five percent range that the companies have announced, and then the retailers may offset that, so you may be seeing increases more one or you know, along the line of one or two. And another factor is that it takes a long time for these prices to get

out to the market. So P and G, you know, it was much earlier this year announced price increases, they only started to take effect in September, So for a couple of reasons, consumers haven't seen all these increases yet, you know, in their pocketbooks. And the last thing I wanted to mention, because technology and artificial intelligence is always looming, a lot of these companies know how you shop, so it allows them to set this pricing in a much

more targeted manner. So if they know you're a discount shopper, you know, they'll push some of those discounts. If they know that you're one that pays full price for things, well you're going to continue to keep paying full price and probably more. Absolutely, there's variation right down to the consumer. And even when it comes to locations, you know, um, you know, conventional wisdom might say an urban you know, a store in a big city like New York or

Chicago would have higher prices. However, if you're a store in kind of a grocery desert where you know that the people don't have any other options in rural America, prices also could be higher there. I mean, so it really, you know, there's not like a one cost for any item, which just varies widely. Sharon Turlip, consumer products reporter at the Wall Street Journal, thank you very much for joining us. Thank you. I'm Oscar Romeris, and this has been reopening America.

Don't forget that. For today's big news stories, you can check me out on the Daily Dive podcast every Monday through Friday. So follow us on I Heart Radio or wherever you get your podcast