Walmart may have to raise prices to deal with economic pressures

http://www.sunjournal.com/walmart-may-have-to-raise-prices-to-deal-with-economic-pressures/

It’s getting more expensive for retailers like Walmart to stock its shelves with household staples like diapers, paper towels and bottled water. The question now is whether that translates into more pain at the check-out line.

Soaring costs for transportation and raw materials — some related to tariffs — have prompted Procter & Gamble, Nestle, Coca-Cola and others to announce price increases this summer on a wide swath of consumer staples. The companies are betting that demand will remain steady even though wage growth is tepid and Americans’ wallets are already getting pinched by higher gas prices during the peak summer driving season.

“We are feeling the pressure,” Nestle finance chief Francois-Xavier Roger said on a late July call with analysts when discussing freight inflation. That same week, Michael Hsu, chief operating officer at Huggies maker Kimberly-Clark, said “it’s clear that we need more” price increases.

Now it’s Walmart’s move. The world’s biggest retailer faces some hard choices as it prepares to release second-quarter results Thursday. It may choose to pass along those price hikes to consumers. But that’s a riskier move nowadays as shoppers can easily defect to Amazon or deep-discounters like Dollar General and Aldi. Walmart could also play hardball with suppliers, perhaps by demanding rebates elsewhere or promoting its own portfolio of more affordable store-brand products.

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