The Wall Street Journal is reporting this morning that Amazon-owned Whole Foods is pressing suppliers to lower prices as their own costs start to decline.
According to the story, Whole Foods "told suppliers at a recent virtual summit that it wants to bring down retail prices in its store aisles as companies’ own costs start to decline, according to a recording of the meeting viewed by the Wall Street Journal.
"As food suppliers have raised wholesale prices, citing higher transport, labor and production costs, supermarket operators said they have passed those increases along to consumers. The higher price tags have helped grocery-store operators generate higher sales and profits.
"After more than a year of price increases, shoppers have been cutting back on purchases, buying cheaper versions of groceries and seeking out deals across supermarket aisles. Industry executives have said they are trying to offer promotions and provide better value. "
That said, a Whole Foods spokeswoman tells the Journal that the retailer "has worked over the past year to absorb rising costs, offer new promotions and work with suppliers to offset the impact of inflation for customers … Whole Foods’ rate of price increases has been lower than the industry average, the spokeswoman said, adding that the chain has lowered prices on some items including cereal, bread and sparkling water. The company is committed to ensuring that prices reflect easing inflation, she said."
- KC's View:
In the case of Whole Foods, let's face it - the idea of "low prices" is relative. To say the least.
That said, I would hope that every retailer is putting this kind of pressure on suppliers, and that retailers themselves are endeavoring to lower prices as costs go down. I'm not sure that Americans are going to have a ton of patience for what they see as profit-taking - I'm sensing a certain amount of outrage among folks who are seeing stories about record profits at oil companies. (Not that we should be surprised.)
Food retailers and suppliers could actually differentiate themselves by working to avoid being lumped in with the oil behemoths.