MORE RETAILERS ANNOUNCE PRICE CUTSWalgreens
(WBA) has joined the growing list of retailers that have announced sweeping price cuts for their products. The list also includes Walmart, Target, Amazon, etc. All of them cite the need to increase customers traffic. Presumably the increase in traffic will also increase sales and translate to higher profits. Let’s hope so. The attitude of current shoppers is almost defensive in nature. Impulse shopping has been replaced by planned shopping for specific items and includes conscious price comparisons with competing vendors and online searches.
The actions of shoppers and the response of retailers are indicative of a weakening economy and reinforce the validity of an earlier statement in my article about Target’s announcement a couple of weeks ago…
“Target’s announcement and others that may follow are more likely indicative of broadly slowing economic activity that could worsen further before relief can be expected.”
For retailers to fall in line so quickly and with so little resistance to the pressure to cut prices tells us two things: 1) Prices were too high; and 2) Things are probably worse than we might imagine.
PROBLEMS IN OTHER INDUSTRIES
Other industries are affected by the slowdown in economic activity, too. Real estate, both residential and commercial, has been ill for some time. Residential real estate suffers from a dearth of transactions. Recent decisions regarding sales commissions have added to the pain. The landscape for commercial real estate is littered with empty locations and defaults.
In the labor industry, increases in the employment rate are the result of part-time job placements and a reduction in the unemployment ranks by those who stop looking. Employers say they cannot find dependable employees and complain about staffing issues. Those are not signs of healthy job market.
Orders for durable goods have fallen off a cliff. See the chart (source)below…
Durable Goods Orders – January 2022-April 2024
