As shoppers feel the sting of higher prices, some politicians are quick to blame retailers.
But industry leaders say this view misses the mark. They argue that slim profits and fierce competition, not greed, drive pricing in their business.
Target CEO Brian Cornell recently tackled this issue on CNBC. “We’re in a penny business,” he said, pointing out how little profit retailers actually make on each sale. This small margin leaves no room for the price gouging some accuse them of.
Today’s shoppers can easily compare prices on their phones.
With just a few taps, they can find the cheapest gallon of milk in town.
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This keeps stores on their toes, always trying to offer the best deals to keep customers coming back.
Target, like many stores, is adapting to tough economic times. Even though they’ve done well recently, beating Wall Street’s predictions, they’re focusing on budget-conscious shoppers.
Joe Kernen absolutely destroyed Elizabeth Warren for calling for price controls.
This is how the media, on both sides, should be pushing against moronic, economically illiterate ideas that have been tried and failed countless times throughout history.
pic.twitter.com/AzplTYNMmG— Geiger Capital (@Geiger_Capital) August 23, 2024
Cornell said they’re aiming for “a consumer who is managing their budget carefully.”
It’s not just Target making changes.
Stores across the board are trying to offer better deals. Target cut prices on thousands of everyday items, while McDonald’s introduced new value meals.
These moves show that stores are competing for customers, not taking advantage of them.
Retailers face the same rising costs as shoppers do.
Walmart’s CEO, Doug McMillon, said that while some prices have gone down, others remain stubbornly high, especially for groceries. He stressed that Walmart is pushing back against price hikes from suppliers, saying, “We think prices need to come down.”
It’s clear that today’s high prices stem from broader economic issues, not retailer greed.
The policies of the Biden-Harris administration, along with wider inflation trends, have created a tough situation for both businesses and shoppers.
Stores are caught in the middle, balancing their own costs with the need to keep prices low for customers.
Nobelist Milton Friedman on price controls:
“If you want a shortage in lettuce, we’ll set a maximum legal price for lettuce below the price that prevails in the market and I GUARANTEE you you’ll have a shortage of lettuce."
Pres. candidate Kamala Harris, ARE YOU LISTENING? pic.twitter.com/c5JjE73Mo5
— Steve Hanke (@steve_hanke) August 21, 2024
Given this reality, proposals like Vice President Kamala Harris’s call for a ban on “corporate price-gouging” in grocery stores seem off-base.
Such ideas don’t account for the thin margins and intense competition in retail.
Retailers aren’t the bad guys here – they’re businesses trying to stay afloat in a competitive market with slim profits.
The real solution to high prices isn’t to blame stores, but to address the root causes of inflation and create an environment where businesses can thrive and offer better deals.
Cornell’s comments highlight a key point: retail success depends on giving customers good value.
In a world where shoppers can easily take their business elsewhere, stores have every reason to keep prices as low as they can while still staying in business.
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This competition, not heavy-handed rules, is what really keeps prices in check.
