retail news in context, analysis with attitude

Axios Capital offers an analysis concluding that e-commerce can be at least partly blamed for current rates of inflation.

Here's the logic:

"We no longer live in a 'Price is Right' world where any given item has a knowable true price that is broadly unchanged from day to day or from store to store. Instead, prices are constantly fluctuating and unpredictable - which makes them much easier to raise.

"Why it matters: Prices, like phone numbers, are things we don't need to remember — we can look them up on the internet if we need to know them. As we pay less attention, however, we become less price-sensitive, giving companies more scope to raise prices."

And here are some examples cited in the story:

"If the restaurant menu is a QR code, on the other hand, raising prices is just a matter of changing numbers on a single web page. That's why e-commerce outlets generally change their prices much more frequently than physical stores do.

"Physical stores are now following suit: E-ink displays at supermarkets can change as frequently as a price on Amazon, while a single item from a single restaurant can have a whole range of different prices depending on where and how it was ordered."

The bottom line, Axios Capital argues:  "Most prices are dynamic these days. Until recently, that worked in consumers' favor, as merchants competed to offer the lowest price. Now, it's working against us, as they attempt to maintain or even increase their margins in the face of higher costs."

KC's View:

I'm not sure that e-commerce is to blame as much as technology in general. But the point is fair - it is far easier to change pricing when all you have to do is touch a button. There's no cash changing hands, so the increases become largely invisible.  Until you get the bill, of course … and the bill always comes due.

Changing prices may be easier, but that means that it also is easier to upset shoppers and ruin whatever relationship you may have with them.