Inflation outrage: Even as prices stabilize, Walmart, Chipotle and others feel the heat from skeptical customers

Inflation
may
be
cooling,
but
consumers’
outrage
over
higher
prices
is
running
hot.

TikTok
users
blasted
Walmart
for
rolling
out
digital
shelf
labels
that
allow
it
to
quickly
raise
and
lower
prices.
Wendy’s
backpedaled
after
its
CEO
suggested
the
burger
chain
may
start
using
dynamic
pricing, the
practice
of
raising
and
lowering
prices
based
on
demand.
And
at
some
Chipotle
locations,
customers
filmed
workers
to
try
to
make
sure
they
didn’t
skimp
on
their
burrito
bowls.

The
three
joined
a
growing
list
of
consumer
brands
contending
with
customers’
deep
frustration
over
high
prices
—
and
wariness
that
prices
will
only
rise
more.
Many
retailers,
restaurants
and
other
consumer
companies
have
seen
sales
fall
as
shoppers
pull
back
their
spending.
Businesses
are
now
trying
to
convince
customers
that
they
offer
the
best
deals,
fueling
a
rise
in
discounts,
promotions
and
value
meals.

Consumers
are
fed
up
with
deceptive
pricing,
said
Jean-Pierre
Dubé,
a
professor
of
marketing
at
the
University
of
Chicago
Booth
School
of
Business.
They’ve
seen
smaller
items
on
shelves,
paid
tacked-on
fees
and
felt
pressure
to
tip
workers
for
things
they
didn’t
tip
for
in
the
past.

“We’re
reaching
a
boiling
point
on
this,”
he
said.

The
companies
stocking
grocery
aisles
contend
consumer
perception
is
skewed.
Grocery
prices
have

risen
just
1%
in
the
past
year,
according
to
data
from
the
U.S.
Bureau
of
Labor
Statistics.
But
food
at
home
prices
have
climbed
more
than
24%
since
May
2019,
stretching
consumers’
wallets
and
stoking
anger
with
companies.

Consumers’

buying
power
has
also
increased
as
inflation
cools
and
the
job
market
remains
strong,
boosting
real
hourly
earnings
for
the
average
private
sector
worker,
according
to
the
BLS
data.

Other
key
costs
are
raising
Americans’
expenses,
such
as
electricity
and
rent,
which
have
climbed
over
the
last
12
months.

“People
experience
the
price
of
consumer
products
constantly,
and
that
does
tend
to
be
a
focus
of
what
they
can
remember
buying
last,”
said
David
Chavern,
president
of
the
Consumer
Brands
Association,
a
trade
group
representing
Coca-Cola,
Procter
&
Gamble
and
dozens
of
other
consumer
packaged
goods
companies.
“But
the
reality
is
that
what’s
happening
in
the
grocery
store,
in
the
drug
store
has
not
been
a
source
of
material
inflation
over
the
last
12
to
18
months.”

In
a
Pew
Research
Center
survey
from
May,
62%
of
U.S.
adults

said
inflation
was
“a
very
big
problem
in
the
country
today,”
a
higher
percentage
than
any
other
issues
they
were
asked
about
including
illegal
immigration,
gun
violence,
violent
crime
and
the
federal
budget
deficit.

That
percentage
has
held
roughly
steady,
even
as
inflation
cools.
In
the
year-ago
survey
by
Pew,
65%
of
Americans
said
inflation
was
a
very
big
problem.

Inflation
has
also
become
a
major
talking
point
on
the
presidential
campaign
trail.
Former
President

Donald
Trump
has
blamed
President

Joe
Biden,
while
has
Biden
accused
companies
of
greed.

Grocery
inflation
may
be
back
to
pre-pandemic
levels,
but
that
hasn’t
eased
the
frustration
of
Americans
who
are
paying
way
more
than
they
did
years
ago.

Consumers,
businesses
and
the
Federal
Reserve
will
get
the
latest
read
on
inflation
on
Thursday,
when
the
federal
government
reports
the
consumer
price
index
for
June.

Dianna
Campbell,
69,
a
TV
producer
and
consultant
in
Manhattan,
said
she’s
noticed
prices
rising
and
staying
high,
whether
it’s
for
laundry
detergent
or
a
restaurant
meal.

“You’re
paying
more
for
it,
but
you’re
giving
me
less,
and
the
quality
is
worse,”
she
said.

Campbell
isn’t
the
only
consumer
angry
about

shrinkflation,
the
practice
of
cutting
an
item’s
size,
but
not
its
price.

Over
the
past
year,
the
term
has
become
a
household
phrase
through
references
in
pop
culture
and
politics.
In
March,
both
the

Cookie
Monster
and
Biden
called
out
shrinkflation
by
name,
the
former
for
reducing
the
size
of
his
beloved
treats
and
the
latter
for
decimating
Snickers
bars.
(Snickers’
parent
company,
Mars,
denied
skimping
on
the
chocolate
bars).

Customers
have
seen
plenty
of
other
examples
on
trips
to
the
grocery
store.

In
a
report
on
shrinkflation,
Sen.
Bob
Casey,
D-Pa.,
called
out
Gatorade
for
swapping
out
a
32-ounce
bottle
for
a
28-ounce
version
and
keeping
the
same
price.

Gatorade
denies
that
it
changed
its
packaging
for
profits.


PepsiCo
spokesperson
Andrea
Foote
told
CNBC
that
the
28-ounce
bottle
of
Gatorade
has
been
around
for
more
than
a
decade,
and
widening
its
distribution
was
part
of
the
company’s
long-term
strategy,
not
a
response
to
the
current
economic
climate.

Retailers
have
also
been
accused
of
shrinking
the
size
of
private-label
items.


Walmart,
for
instance,
cut
the
number
of
sheets
in
its
Great
Value
paper
towel
rolls
from
168
to
120
but
did
not
reduce
the
price.
Company
spokeswoman
Tricia Moriarty
said
it’s
not
shrinkflation
because
Walmart
reformulated
the
product
to
make
each
sheet
more
absorbent.

Awareness
of
shrinking
portions
contributed
to
recent
backlash
against


Chipotle.
After
some
customers
thought
their
burrito
bowls
were
smaller,
they
began
filming
the
workers
making
their
orders
and
posting
the
videos
on
TikTok.

In
an
interview
with

Jim
Cramer
on
CNBC’s

“Mad
Money”
in
late
May,
CEO
Brian
Niccol
said
Chipotle
has
not
reduced
portion
sizes
and
described
the
TikTok
trend
of
filming
workers
as
“a
little
rude.”

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

Wells
Fargo
analyst
Zachary
Fadem
tested
out
the
theory
himself,
ordering
75
burrito
bowls
from
eight
New
York
City
Chipotle
restaurants
and
weighing
them.
The
burrito
bowls’
weight
varied
based
on
location,
leading
the
analyst
to
conclude
that
consistency
was
the
issue
—
not
shrinkflation.

But
the
feeling
of
paying
more
and
getting
less
isn’t
just
in
consumers’
heads.
It’s
become
a
common
experience
when
shoppers
stock
up
on
groceries
and
get
ready
for
backyard
barbecues.

This
July
Fourth,
for
example,

customers
paid
an
average
of
$71.22
for
a
cookout
for
10
people,
according
to
the
American
Farm
Bureau
Federation.
That’s
up
5%
from
last
year
and
30%
from
2019.

Wendy’s
and
Walmart
have
also
recently
felt
fury
from
consumers
concerned
they
may
get
ripped
off

In
late
February,
the
burger
chain
had
to
backpedal
after
CEO
Kirk
Tanner
told
investors
that
Wendy’s
would
test
features
as
soon
as
2025
that
included
“dynamic
pricing”
—
such
as
adjusting
menu
prices
to
drive
demand
during
slower
times
of
the
day.
Wendy’s
later
said
that
it
had
no
plans
to
raise
prices
when
demand
is
highest
and
blamed
misleading
media
reports
for
the
uproar.

More
recently,
social
media
users
criticized
Walmart
over
its
decision
to
roll
out
digital
shelf
labels,
higher-tech
price
tags
that
allow
it
to
quickly
and
easily
change
prices.
The
retailer
said
last
month
that
it
would
add
the
technology
to
more
of
its
stores
and
plans
to
have
them
in
2,300
locations,
or
roughly
half
of
its
U.S.
footprint,
by
2026.

On
TikTok,
some
saw
the
move
as
the
first
step
toward
the
nation’s
largest
retailer
using
dynamic
pricing similar
to
Uber’s
surge
pricing.

Walmart,
on
the
other
hand,
said
the
new
price
tags
will
cut
a
tedious
task
from
store
workers’
to-do
lists.
Digital
shelf
labels
are
designed
to
save
time,
Walmart
spokeswoman
Cristina
Rodrigues
said.
They
have
LED
lights
that
blink
to
guide
store
workers
who
are
restocking
items
or
to
help
them
find
products
for
a
customer’s
online
order.
They
eliminate
the
need
for
store
workers
to
swap
out
traditional
paper
tags.

She
said
Walmart
has
“no
plan
to
change
the
frequency
or
implement
different
pricing
methods.”
Rodrigues
said
all
price
changes
will
still
be
approved
by
the
merchandising
team.
With
the
tech,
a
store
worker
has
to
stand
in
front
of
the
shelf
and
use
a
mobile
app
to
raise
or
lower
the
price,
she
said.

Dubé
of
the
University
of
Chicago
said
the
pushback
comes
from
years
of
shoppers
feeling
ripped
off
by
price
increases.

“Consumers’
automatic
reaction
is,
‘This
sounds
like
yet
another
unfair
thing
firms
are
going
to
do
to
try
and
cheat
us,'”
he
said.
“The
presumption
is
this
is
just
another
attempt
to
screw
them
over.”

But
he
added
dynamic
pricing
can
have
silver
linings
if
restaurants
and
retailers
pursue
it.
Prices
can
go
down
as
well
as
up,
he
said.
In
Europe,
for
example,
some
grocery
stores
cut
prices
toward
the
end
of
the
day
to
accelerate
sales
of
baked
goods
or
perishable
items
and
reduce
food
waste.
If
Wendy’s
lowered
prices
during
slower
times,
he
said
customers
could
actually
get
cheaper
meals.

But
consumers
don’t
have
to
wait
much
longer
to
start
seeing
lower
prices.

As
foot
traffic
declines
for
retailers
and
restaurants,
some
are
leaning
into
value
to
bring
back
customers.
Over
the
past
couple
of
months,


Target,


McDonald’s,
Aldi
and
others
have

stepped
up
price
cuts
and
debuted
new
deals
for
customers.

Walmart
said
it
rolled
back
prices
on
nearly
7,000
items
in
its
food
categories
in
the
first
quarter
of
the
year.


Amazon-owned
Whole
Foods
reduced
prices
over
the
last
six
months
on
about
25%
of
its
items,
including
nearly
900
of
its
private-label
items.
And
a
slew
of
fast-food
chains,
from
McDonald’s
to
Starbucks
to
Burger
King,
have
recently
unveiled
new
value
meals
to
drive
sales.

Consumer
packaged
goods
companies
are
also
reversing
course
as
their
volumes
decline
and
investors
fret
over
lagging
sales.
During
Covid,
companies
like


Mondelez
stopped
promotions
as
they
focused
on
keeping
up
with
demand
and
navigating
supply
chain
snarls.

But
now
Mondelez
is
one
of
the
companies
looking
to
bring
back
consumers
with
lower
prices.
The
snacking
company,
which
owns
Oreos
and
Clif
bars,
is
expecting
a
challenging
year
for
its
U.S.
business,
as
low-income
consumers
buy
its
cookies
and
crackers
less
frequently.
Mondelez
executives
said
in
June
that
they’re
planning
promotions
for
brands
like
Chips
Ahoy!,
which
tends
to
lose
ground
to
cheaper
private-label
options.
The
company
also
cut
prices
on
some
of
its
larger
pack
sizes.

“The top priority is really to keep on growing the company and keep on delivering volume growth,”
Mondelez
CFO
Luca
Zaramella
said
at
the
Evercore
ISI
Consumer
&
Retail
Conference
last
month.

Kroger,
which
carries
many
of
those
items,
has
noticed
that
trend,
too.

Kroger
CEO
Rodney
McMullen
said
on
an
earnings
call
in
mid-June
that
brands
are
spending
more
of
their
own
money
to
offer
discounts
to
customers
and
drive
more
volume.
And
he
said
the
level
of
promotions
is
similar
to
pre-pandemic.

It
remains
to
be
seen
whether
companies
can
tamp
down
consumer
outrage
as
the
deals
and
discounts
start
to
take
hold.