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Credit Suisse: Total basket up 2.7% year over year; highest rate of price inflation in two years

BY Michael Johnsen

NEW YORK — Financial services firm Credit Suisse tabulated total basket increases of 2.7% year over year and 1% month over month for retail.

“Our monthly pricing survey in Dallas and Chicago showed that all retailers raised prices on a year-over-year and month-over-month basis with the exception of Jewel [a Supervalu banner operating in Chicago],” Credit Suisse research analyst Ed Kelly wrote in a note published Monday.

And though recent comments from Dollar General and Walmart suggested that lower-end consumers are beginning to feel the pinch from higher costs, retailers are by and large successfully passing those price increases along to the consumer. “Thus far, the pricing environment has remained rational, although the key player to continue watching is Walmart,” Kelly noted.

That increase in product pricing is accelerating most significantly across food items, Kelly noted. “Inflation was highest in our food basket, up 6.5% year over year, an acceleration from 3.4% last month,” he wrote. Health and beauty inflation was up 0.7% year over year, versus 2.9% in May. On a month-over-month basis, food inflation totaled 2.6%; conversely, average price changes were down across health and beauty products by 0.9%.

Walgreens and CVS/pharmacy had some of the greatest pricing disparities, as compared with everyday-low-price value leader Walmart. In the Chicago market, Walgreens relative pricing was 28.3% higher than Walmart; CVS’ prices were 21.9% higher. In Dallas, CVS/pharmacy relative pricing was 30.9% higher than Walmart, and Walgreens was 25.6% higher.

That’s not altogether a bad situation for the two drug retailers tracked in the Credit Suisse pricing survey but bears watching, Kelly cautioned. “We believe that drug stores are among the best-positioned retailers to pass along inflation, but they must remain vigilant not to let their pricing gap versus other formats increase too much,” he said.

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Walmart reorganizes for back-to-school season

BY DSN STAFF

BENTONVILLE, Ark. — Walmart announced that it is making back-to-school shopping even easier with new store improvements.

Back-to-school items now are organized, both in stores and online, in one place and categorized by school age group, so families can quickly and easily shop supplies appropriate for their child’s grade, the company reported. Many of the most common school supply list items are located down the center of the back-to-school aisle, allowing families to quickly check these items off their list.

“We know our customers need to stretch their dollars as far as they can,” said Duncan Mac Naughton, Walmart’s chief merchandising officer. “We’re making it even easier and more affordable for them this back-to-school season with low prices on more items along with our ad match policy and a better shopping experience.”

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Rite Aid kicks off back-to-school deals

BY Alaric DeArment

CAMP HILL, Pa. — Rite Aid is offering specials on back-to-school items for the upcoming shopping season, the retail pharmacy chain said Monday.

The National Retail Federation predicted that the weak economy will drive many shoppers to seek items on sale, and 1-in-5 shoppers will look for items at the local drug store. Weekly specials will be featured in circulars during the season, and Rite Aid stores situated near college campuses will carry extra items for students living in dorm rooms.

“In response to today’s value-conscious consumer, we have greatly expanded our value programs in recent years,” Rite Aid SVP marketing John Learish said. “Back-to-school bargain hunters can use our sales circulars as a map and their Wellness+ customer loyalty card as a key to unlock the best back-to-school values at Rite Aid.”

Wellness+ members will be able to collect +UP Rewards for back-to-school purchases until July 30. For example, $1.98 for three 100-sheet Mead composition books will yield a $1 +UP Reward that can be used like cash on future purchases.

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