The economy is not going back to the way it was
SUMMARY: Consumers say this is the worst time to buy a house, and they believe that product shortages will lead to a recession. They’re tired of having money and being told they can’t eat out or buy products because they are out of stock, and it’s going to worse. The economy is never going back to the way it used to be.
When I got a flat tire on my Genesis SUV, I took it to the dealer since it was a particular tire size. It took four days to replace the tire because of a parts shortage. In online forums, people have been waiting weeks for new batteries and windshields. Welcome to the new economy.
If you follow the news, there is a good chance you read about the dozens of container ships waiting to be offloaded on the West coast. This has led to product shortages of every kind, from bicycles to electronics, when consumers have money and are ready to spend. Online, consumers are blaming brands, not COVID, for product shortages.
On top of all this, some brands are raking consumers over to hot coals. If you’re able, for example, to find a new Kia Telluride, you’re going to pay as much as 110% over MSRP. Imagine paying $65,000 for a Kia.
Retailers, in addition to facing product shortages, are having a hard time hiring employees. Most don’t want to work retail, forcing some to add benefits like paying for college tuition. Restaurants are being hit particularly hard because employees have had enough of serving rude customers and are afraid of getting sick from COVID.
The economy is never going back to the way it used to be. Higher wages are going to equal higher prices on almost everything leading to inflation. The hottest career need right now is supply chain management as brands try and figure out how to ensure supply without increasing prices.
What will this do to brands? Consumers will shop around as prices increase, and I expect private label sales to continue to grow. That $2.50 cut fruit bowl at Publix is now almost $5.00. Even our local pizza shop has increased prices on all menu items.
So the question becomes, “how much cost increases are brands going to pass along to consumers, and will consumers abandon their favorite brands because they cost too much now?”. Some brands have enough brand equity to weather the storm, but others will lose market share.
Originally published at https://www.newmediaandmarketing.com on September 20, 2021.