Tags: Consumer | goods | companies | prices

Depressed Spending Forces Consumer Goods Companies to Cut Their Prices

By    |   Friday, 04 April 2014 11:47 AM

Stagnant consumer spending in the wake of the Great Recession is forcing consumer goods companies to cut their prices, The Wall Street Journal reports.

Americans on average spent $2,515 on packaged consumer goods last year, up just 0.6 percent from 2012, according to Nielsen. Spending gained 2 percent in 2011, but that was largely thanks to inflation.

About 10.8 percent of household spending now goes to packaged goods, down from 11.2 percent in 2000, according to Ali Dibadj of Bernstein Research, The Journal reports.

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"It's still a tough time for the average American," Jim Craigie, CEO Church & Dwight, which owns Arm & Hammer, tells the paper. "There's nothing wrong with the industry. You just have an economy that's stagnant and people are having to trade down."

Consumer goods companies are teaming up with retailers to offer a host of discounts. "When we see some of the promotional pricing out there, it's pretty clear someone has lost their mind," Bill Schmitz, a consumer product analyst at Deutsche Bank, tells The Journal.

Perhaps fortunes will change for the consumer goods companies. Retail sales increased 0.3 percent in February, the largest gain in two months.

"The consumer appears to be back in the game," Millan Mulraine, deputy chief economist at TD Securities in New York, tells Reuters. "We see this as further confirmation that the underlying momentum in the economy remains quite favorable."

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Stagnant consumer spending in the wake of the Great Recession is forcing consumer goods companies to cut their prices, The Wall Street Journal reports.
Consumer,goods,companies,prices
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2014-47-04
Friday, 04 April 2014 11:47 AM
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