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It's Not Inflation It's Price Elasticity!

Jennifer MarksJennifer Marks
Ah, the Business Buzz Words.
     "Thinking outside the box."
      "Downsizing."
     "Right-sizing."
     "Best practices."
     "Learnings." As in: "We've gotten a lot of learnings from this project." That one, for this English major, is akin to nails on a chalkboard.
     "It's used to describe price hikes without actually having to use the ugly words ... ‘higher retail prices.'"
     In the latest round of retail calls with analysts, a new catch phrase cropped up: "elasticity." It's used to describe price hikes without actually having to use the ugly words ... "higher retail prices."
     What also appears to be a bit elastic: reality. Higher prices aren't really a problem for Macy's, you see, because Macy's deals in better goods. On the other end of the spectrum, analysts were told higher prices aren't really a problem for Big Lots because its pricing is always 10% to 50% less than the competition's.
     The irony doesn't stop there. As everyone knows, de-specing is the order of the day, yet most retailers profess to easing the sting of higher prices by enhancing value and quality. Poppycock.
      From "poly rich" sheeting to lightweight "quick dry" towels, the consumer is getting less than she bargained for - literally.
     I assert this doesn't matter too much in the realm of home textiles. The consumer buys milk every week, so she notices right away when prices change or, conversely, when the price remains the same but the package is now slightly less than a full quart.
     She buys clothing somewhat regularly, especially if she has kids, so she's quick to note that a cotton T-shirt was $6.99 last year and is now $8.99.
     But home textiles? How often is she buying bedding ensembles? Once every five years or so? If last year's bed-in-a-bag contained eight pieces and this year it carries only four, she'll be none the wiser.
Is a bath towel that costs a dollar more and weighs slightly less going to set off her alarm? Probably not. I doubt that extra dollar is a purchase-killer.
     All of which is to say that in a weird way, home textiles do not face the same sort of peril of consumer backlash over higher retails that faster-turning product categories do. Sometimes, there are advantages to being the odd duck.

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