Inflation stifles consumption, causing Amazon Fresh, Walmart and Target to recently reduce prices to attract buyers.
The Amazon Fresh food store system (part of Amazon) has just joined the list of retail chains in the US that offer product discounts. On May 23, this company announced to lower the prices of thousands of products to attract consumers.
Amazon Fresh said there will be discounts of up to 30% on 4,000 items every day. This policy applies to both in-store and online purchases.
Above CNN, Amazon said many products, from meat, seafood, frozen foods, milk to snacks, will be cheaper than before. “Increasing weekly promotions with thousands of products is how we compete and help customers save,” said Claire Peters – Vice President of Global Affairs at Amazon Fresh.
Customers shop in a supermarket at Walmart in Los Angeles. Image: Reuters
In recent weeks, many major American retailers have simultaneously reduced prices, such as Target and Walmart. They want to entice customers to spend more on both essentials, like food, and non-essentials, like clothes and decorations.
Target this week announced discounts on more than 1,500 products, from butter to laundry detergent. The company said that this summer, thousands of more products will also be discounted, to help consumers “save millions of dollars”.
Last week, Walmart also said it had reduced prices on 7,000 products in the store. They explained that some essential goods have recently cooled down.
In the past few years, American retailers have had to increase prices due to inflation. However, recently they have begun to encounter difficulties, when consumers are not shopping as much as before. Rising prices force them to choose between what they want and what they need. In the end, retailers had to give in.
This is not just a problem for consumers and major retailers, but also for the entire US economy. About two-thirds of the country’s GDP comes from consumption.
Over the past year, Americans began to reduce spending, when prices increased 20-30% compared to 3 years ago. Meanwhile, earnings are not keeping up, said Sarah Wyeth – Director of retail and consumer research at S&P Global Ratings.
This causes consumers in all segments, from low to high income, to look for discounted products. “The challenge for retailers today is to eliminate the savings mentality of consumers,” Wyeth said.
In the US, Swedish furniture company Ikea also recently slashed prices on hundreds of furniture and home decorations. Food store chain Aldi also offers promotions on more than 250 summer essentials. “As more and more experts warn about inflation, now is the right time to cut prices even more aggressively,” Dave Rinaldo – Director of Aldi America said in the announcement.