After years of steady price increases, food and packaged goods manufacturers and retailers are reportedly offering more discounts in both the United States and Europe.
In the U.S., in the 12 months ending in June, 28.6% of products were sold with promotions such as discounts, coupons and spending on special placement of the products in stores, the Financial Times (FT) reported Saturday (July 6), citing data from NielsenIQ.
Three years ago, that percentage dropped to 25.1%, according to the report.
This change comes as several firms in this category report that consumers are growing more cautious in their spending. That’s especially true among lower-income consumers, the report said.
The report added that General Mills said that it is now spending 20% more on coupons, Mondelez has reduced prices on some of the larger packages of its Chips Ahoy cookies, Walgreens Boots Alliance has invested in promotions and price reductions to boost traffic and customer loyalty, and Nike plans to introduce shoes priced under $100, per the report.
The power of manufacturers and retailers to raise prices has been somewhat “depleted,” Carman Allison, a vice president at NielsenIQ said in the report.
“Consumers are voting with their wallet,” Allison said. “If your price goes up too aggressively, a lot of times consumers will switch brands. They will switch stores.”
Amazon and Walmart are also among those who are upping their discounting efforts in an attempt to secure the loyalty of cost-conscious consumers, PYMNTS reported in June.
For example, Amazon is reportedly gearing up to add a section featuring low-cost items shipped from China to overseas consumers. The online marketplace, per the report, aims to onboard sellers in the coming months and begin accepting inventory in the fall.
For its part, Walmart is going all-in on summer discounting events, following up its recently ended members-only Walmart+ Week with an event that will run from July 8 to July 11, dubbed Walmart Deals, which will be open to all.
The Bureau of Economic Analysis said June 28 that while personal income rose by 0.5% and disposable personal income also increased by 0.5%, personal consumption expenditures grew at a more modest rate of 0.2%.
The latter figure indicates cautious consumer spending, PYMNTS reported at the time.
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