retail news in context, analysis with attitude

The Chicago Tribune has a piece this morning suggesting that a price war will be the result of the current battle between retailers and manufacturers over costs and prices. Here’s the logic:

“Consumers are trading down to private-label brands. They're shopping for discounts at Wal-Mart and hunting for promotional bargains at their supermarkets. That spells trouble for foodmakers, who jacked up prices last year after commodities spiked. They desperately want to hold the line, even as sticker shock in the grocery aisles threatens sales and profits—and raises the odds of an eventual price war. ”

KC's View:
There’s a lot of kvetching and debating about prices and costs, but ultimately I don't believe it is going to matter who is right and what their motives happen to be. The consumer is going to drive prices lower if current price levels cause a significant and quantifiable shift in shopping behavior.

At this point, with so much consumer concern about the economy, the best course for manufacturers and retailers to establish themselves as being advocates for shoppers, who don’t care about commodity prices or contracts. They just care that they are having trouble feeding their families, and they are looking for help.

If a price war commences, and the collateral damage is industry credibility among consumers, then so be it.