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Some retailers starting to raise prices
Shoppers carry their purchases along the Magnificent Mile shopping district in Chicago, Ill.
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Kai Ryssdal: Now it's time for today's installment of government statistics intended to explain why the economy is, or is not, where we'd like it to be. Consumer spending is the number du jour. According to the Commerce Department, we spent a teeny bit more in August than we did a month earlier. Four-tenths of 1 percent more to be exact. That was a teeny bit better than analysts expected. And it is a teeny bit of good news for retailers. They've been stuck the past couple of years in a discounting frenzy that's made it impossible to selling anything without practically giving it away. But today's numbers might finally give them a little pricing wiggle room, as Janet Babin reports.
Janet Babin: Wal-Mart was one of the first to raise prices on certain products back in August. Now, small pockets of stores are daring to follow suit.
Analyst John Morris at BMO Capital Markets has seen a few specialty retailers try price increases on for size.
John Morris: We've seen some strength in certain kinds of items in fashion, such as a military jacket at one retailer; such as a really on the mark, on-trend styling of sweaters at another retailer.
Some stores will probably try to bump up prices just a notch, even if most shoppers don't bite.
Professor John Quelch at Harvard Business School says retailers know that some of us out there won't notice the higher price tag.
John Quelch: At least if you have set the list price high, you're in a position to perhaps sell some of the merchandise at that higher price, and I think that's what the retailer's looking to do this season.
Other retailers would like to raise prices, but they can't. Many consumers are addicted to deep discounts.
Ellen Davis is with the National Retail Federation.
Ellen Davis: We're not seeing consumers go to the stores and just decide to buy a flat-screen TV or a GPS like they may have in 2005 or 2006.
Stores that do raise prices may be able to attract value-conscious consumers when they slash prices: The higher the list price, the deeper the discount appears.
I'm Janet Babin for Marketplace.
Prices for most high end goods are not being reported properly due to widespread knowledge by stores as to how to beat their own computer systems with SKU unit price reporting and other slights of hand. An independent report on prices of any random selection of 80-100 highest end items will show what consumers already know: prices are inflating at a very fast pace throughout the US Northeast but the official story is being filtered to avoid inflationary panic.
The consumer is no longer driving the demand model: reduced inventories have reduced the need for traffic. Next step is to reduce brick and mortar stores to cut payroll and operating overhead. The mall operators are in for a very bad time getting their commercial paper renewed by 1st quarter 2011, but the retailers will do fine by firing their staffs and pointing to the canard of "same store sales" which does not reflect store closings to justify padded stock prices and bonus checks.
Ridiculous.
