Faced with weakening demand, price-sensitive consumers and easing inflation, some sectors are now forced to grow profits without the tailwind of price hikes.

After years of unbridled consumer spending on everything from home improvement to dream vacations, some companies are now finding the limits of their pricing power.

Shipping giant FedEx last week said customers have shied away from speedier, pricier shipping options. Airlines including Southwest discounted off-peak fares in the fall. The likes of Target and Cheerios maker General Mills have cut their sales outlooks as more consumers watch their budgets.

It’s a shift from the recent years when consumers spent at a breakneck pace — and at high prices — lifting corporate revenues to new records. But faced with weakening demand, more price-sensitive consumers, easing inflation and better supply, some sectors are now forced to find profit growth without the tailwind of price hikes.

The answer across industries has been to cut costs, whether it’s through layoffs or buyouts, or simply becoming more efficient. Executives have spent the past several weeks selling these cost-cutting plans to Wall Street.

  • numberfour002@lemmy.world
    12·
    1 year ago

    I don’t know that I’m fully able to articulate my opinion on this, but I’ll give it a try.

    Overall, I feel like a lot of companies took “market conditions” for granted in the past 3 - 5 years. They didn’t really make any significant improvements. In fact, some of them are notably worse. All that in spite of raising prices and lowering quality/standards. For a time, they may have been correct – no matter how much they sucked, they’d still rake in the profits. Perhaps now the short sighted decisions are biting them in the ass?

    I don’t have a lot of experience with some of the companies listed, but Target and FedEx for sure have declined in the value they offer me, in my anecdotal experience.

    FedEx is a decent shipping option for my area, with some caveats and annoyances. But in the past 5 years, nearly every time I’ve opted to pay for expedited shipping with them, they’ve failed to deliver on time. So I’m fine with their cheaper standard shipping options, but the more expensive stuff is a waste of money.

    Target is an okayish retailer for what it is, but there are so few locations that my experience with them over the past 3 - 5 years is primarily online. Their e-commerce platform is alright, but the selection is noticeably limited compared to the alternatives. Initially the online site either didn’t have 3rd party sellers or it was very limited. But now those have taken over a lot of categories and products, making the Target website as hit or miss as the others, so there’s no real incentive for me to check them out when I’m shopping.

    • poppy@lemm.ee
      2·
      1 year ago

      I agree with all your text but

      Initially the online site either didn’t have 3rd party sellers or it was very limited. But now those have taken over a lot of categories and products, making the Target website as hit or miss as the others, so there’s no real incentive for me to check them out when I’m shopping.

      I find this experience particularly annoying. I go to Target.com to find stuff sold by Target. I don’t need another place for random no-name companies to hawk their wares. Especially since a lot of it just seems like drop ship crap.