Grocery retailers are finding it difficult to raise their prices on products despite a strong economy, record unemployment levels, high consumer confidence and rising inflation.
According to the Seattle Times, companies like Amazon.com Inc. (Seattle), Walmart (Bentonville, Ark.), Aldi (Essen, Germany) and Lidl (Neckarsulm, Germany) have created a price war that’s causing a ripple effect throughout the grocery industry. As a result of the retailers’ ongoing low prices, shoppers have become accustomed to paying less, and have ultimately become less loyal to name brands, instead opting for generic products when possible.
The incongruence has created worry surrounding e-commerce pricing, as the new business models go against traditional economy theories, and government policymakers and the Federal Reserve are struggling to understand “technology’s relationship to inflation and pricing power,” said the Times.