Procter & Gamble says higher volume, not prices, lifted sales
Procter & Gamble says higher volume, not prices, lifted sales
Procter & Gamble Co., which makes everything from Tide laundry detergent to Tampax tampons to Crest toothpaste, saw sales of its products grow 3% year-over-year, according to its latest quarterly financial results.
And, importantly, that increase in sales came mostly through higher sales volume, rather than higher prices.
Companies that sell packaged goods to us consumers — razors and toilet paper and cleaning products — they’ve had a pretty decent couple years, said Arun Sundarum at CFRA Research. But, “growth has been driven by, you know, higher prices, which is obviously not sustainable over the longer term,” said Sundarum.
A company can only raise its prices so much before customers start to look for cheaper options. So now, companies are trying to keep their prices in check and focus more on sales volume, said Sundarum.
P&G is having some success in that area. In part, because — as their chief financial officer told Bloomberg — some consumers are consistently buying larger packs of things.
“That indirectly means that more consumers are shopping at places like Costco or a Sam’s Club, where you can get those larger pack sizes,” said Sundarum. “And oftentimes that comes at a better value to the consumer.”
“Value” is really what shoppers are looking for right now, after years of high inflation, said Brian McCarthy, a principal in Deloitte’s retail strategy and business transformation division.
Value doesn’t just mean spending less. It can be a combination of things, and not just about the product itself.
“For some, it’s going to be quality,” said McCarthy. “For others, it’s price; for others, experience, you know, for some it’s convenience.”
So if retailers can make it easy and maybe satisfying to buy, say, a 36-roll pack of toilet paper, that approach can win over some customers.
And, overall economic conditions might make those customers open to spending a bit more in the months ahead, McCarthy said.
“We’re starting to see interest rates come down while the labor market remains strong and inflation is starting to wane as well,” said McCarthy.
Those factors could give retailers a lift in many categories, including some that have struggled the last couple years, said Craig Rowley, a senior client partner at Korn Ferry.
“We’re seeing apparel doing better. We’re seeing athletic wear doing better. We’re seeing home goods doing better,” said Rowley.
All that stuff we bought a ton of early in the pandemic, he said — it’s starting to wear out and needs to get replaced. And we’ve got a bit more spending power to do that right now.
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