- Rite Aid posts third consecutive quarterly profit as company expands Wellness+
- Nielsen survey: Price most persuasive when incentivizing brand switch; improved features least influential
- Rite Aid launches marketing campaign for Wellness65+
- Rite Aid launches Wellness+ extension for seniors
- Now with 79 million enrolled in its loyalty program, Walgreens posts 6.3% in comp sales for July
WHAT IT MEANS AND WHY IT’S IMPORTANT — Analysts already are speculating dire outcomes if the price of a gallon of gas eclipses $5 this summer on account of Middle East turmoil today. Any additional strains on the supply chain system, such as increased operational costs as high as 20%, would only make matters worse.
(THE NEWS: Rising gas prices not only factor driving supply chain costs. For the full story, click here)
A Stifel Nicolaus analysis issued last week suggested that consumers on average would have 2% fewer discretionary dollars to spend if gas prices peaked at $5 per gallon. The speculation is even worse for the poorest of Americans — those that are part of the lowest 20% in terms of income would have 6% fewer discretionary dollars.
About the only retailers who truly benefit from high gas prices are those with a bank of gas pumps out front, a line of pharmacists within the store and row after row of food items in between — because it’s those supermarkets that will satisfy that growing need for the “one-stop shop.”
But even those supermarket retailers could feel the pinch if higher gas prices, compounded by increased transportation costs as was suggested by the National Retail Federation, are reflected in escalating pricing of consumer-packaged goods.
“The environment is much more rational today, and competitors are passing on cost inflation in categories, including dairy, perishables, produce and dry grocery,” suggested Ed Kelly, Credit Suisse research analyst, in a recent note regarding Safeway. “The company was able to pass along 0.5% to 0.7% of inflation in [the fourth quarter], and expects to comfortably pass on expected inflation of 1% to 2% during the year,” he noted. “We remain somewhat skeptical, as inflation could easily be higher than management expects.”