Shop Talk

Retailers, consumers and prices

Check Out Line: Clearing out the pantry

January 30, 2009

BRITAIN-WOOLWORTHS/CLOSINGCheck out people buying only what they use.
Remember when every time you went to the store you bought toilet paper, paper towels and other basics just so that you wouldn’t run out?
Well, those days appear to be gone.
As companies like Colgate-Palmolive and Procter & Gamble report earnings, one thing becoming clear is that consumers are now using up everything they have in their cupboards before buying replacements.
Call it “destocking,” “pantry deloading,” or “inventory drawdowns,” but whatever it’s called, it cuts into sales — for retailers and manufacturers. As consumers are using up the shampoo or soup they have on their shelves before buying more, retailers are also getting rid of excess inventory before buying more from manufacturers.
With the economy in recession, consumers have every reason to be frugal. On top of that, manufacturers have raised prices over the past two years in order to cope with soaring commodity costs.
But with fewer items being purchased, the next question is whether those manufacturers will have to lower prices to maintain market share.
Also in the basket:
GDP sees biggest drop in 27 years
Unilever faces slowdown just as new CEO takes over
 (Photo: Reuters)

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