Large numbers of businesses are using inflation as an excuse to price gouge consumers and fatten their profits, according to a new survey from Digital.com.
"Over half of retail businesses (56 percent) said that they raised prices not just to make up for losses, but to actually see greater profits," says the company's small business expert, Dennis Consorte. "What we saw was that over half of retailers increased their prices by 20 percent or more." That's far greater than the latest inflation rate of 6.8 percent for the year.
In November, Digital.com surveyed 1,000 retail owners and executives to discover how inflation is impacting profitability, pricing, and discount offers this shopping season. Consorte was interviewed on Not Fake News' Lean to the Left Podcast, now streaming.
In addition to raising prices more than necessary to account for inflation, Consorte says the survey revealed that 52 percent of businesses are offering fewer or no discounts this holiday season, adding that shrinking discounts and increasing the price of complementary products are the most popular ways businesses are driving up the ultimate price to the consumer.
Other tactics, according to Consorte, is "participating in shrinkflation" -- selling smaller portions of a product at the original price.
Who are the primary culprits?
"Large enterprises are most likely to do it to increase their profits vs. small businesses," he says. "We also saw a lot of traction in this area in the automobile industry, e-commerce, and electronics. We even saw it in some other places, like gardening, health and beauty aids, and furniture."
Capitalizing on Fear
In addition to using inflation as an excuse to price gouge consumers, some companies are using the negative news about supply chain shortages as another way to boost prices, sometimes unnecessarily, according to Consorte.
Some companies, he explains, were forced to increase prices because their costs went up and they wanted to make up for earlier losses caused by the pandemic.
But then...
"There are also companies, and we saw this mostly among the large enterprises, where, yes, they took advantage of peoples' fears," Consorte says. "People are afraid of what's going to happen, so with the lockdowns, with Covid, the supply chain, people are very fearful in a very uncertain time and so, of course, some companies take advantage of that."
All of this has ramifications for the overall economy, including the stock market, aknowledges Consorte.
"When it comes to these large enterprises, they are also thinking of their shareholders," he says, especially if they need to show increased holiday season sales and profits. If that's their driver, then, of course, if they can take advantage of peoples' fears to hit their numbers in order to make their shareholders happy, they're incentivized to do that."
There is much more in the interview, as Consorte discusses the "Great Resignation" -- the phenomenon of many people quitting their jobs to seek other opportunities in the wake of pandemic shutdowns. The conversation turns to vaccinations, personal freedom, personal responsibility, and more.
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