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Inflation and business strategy of “sandwich packs”

Business strategy “packet of snacks”

Recently, the price of food, global food has increased sharply, from bread to pizza. Everyone is afraid inflationaryfrom seller to buyer.

Businesses must use tricks to not increase product prices and still be able to avoid damage and losses during inflation, that is “the economics of the snack pack”.

Inflation and business strategy of

The economics of the snack pack is what many businesses use when inflation hits. (Photo: Bloomberg)

American consumers who recently bought Doritos snacks, if they are observant, will find that there is something wrong with this pack of snacks, namely about 14 grams lighter, while the price remains the same.

In the 1970s, Woolworth department stores used a similar tactic. A pencil case of 30 pens costs 99 cents. However, 3 years later, the pencil case has only 24 pens left, but the price is still 99 cents.

In 2016, the sheet The Wall Street Journal Posted an article criticizing Toblerone chocolate company for the same serrated chocolate bar, but that year’s batch of saw teeth were further apart, less chocolate.

The economics of the snack pack is a way businesses use to not increase product prices while still avoiding some damage when inflation occurs.

It can be said that this is a reluctant solution, businesses are forced to resort to the guise of “reducing the size – keeping the price” because they have no other way and do not want consumers to react to the word ” inflationary”. This is the time when they need to use this tactic when global price inflation is becoming a hot story. America is an example.

Inflation in the US highest in 4 decades

Inflation in the US increased by 8.5% in the past year, the highest level in 40 years. This is nothing more than a blow to the wallets of American consumers.

“Everything is at least $1 more expensive. Eggs are $1 more expensive. Gas is expensive. The rent is ridiculously high. If you think $1 is too little, try having a baby. Look at it small, everything will add up,” said Jason Emerson, a resident of Oakland County, California.

According to statistics from the US Department of Labor, food prices increased more than 8% – the highest level since May 1981. In which, the price of items containing protein increased by more than 16%. Commodity prices increased by 10%. Energy prices increased by up to 40%.

Inflation and business strategy of

People shop at a supermarket in New York, USA. (Photo: AP)

Financial worries, especially amid inflation and volatile stock markets, have left many people insecure with their meager savings.

“Milk and bread are very expensive right now. You have to calculate how much money you have and how long you can use it, whether you have enough to spend until next month’s pension. For families with young children, this This is even more difficult,” said Mercedes Vargas, a resident of Alameda County, California.

By page CNN Businessmost of the US inflation in March was the result of the war between Russia and Ukraine, which pushed up global basic commodity prices.

“The price shock is continuing to seep into the US economy. There is a risk of an additional energy price shock due to the Russia-Ukraine war and the possibility that the European Union (EU) may embargo crude and Russian gas. Such a move by the EU would cause huge fluctuations in global oil prices,” said Steve Deller, professor of economics at the University of Wisconsin-Madison.

In order to bring inflation under control, the US Federal Reserve (FED) has had drastic tightening plans, such as ending the asset purchase program, or expecting another 5-6 interest rate hikes in the coming year. this year.

However, monetary policy tools always take time to take effect, which means that US consumers will have to endure price pressure for a while longer before being relieved from this pressure.

Amazon raises prices due to inflation

Recently, an Amazon representative said it would raise the fee to 5% for partners using their platform.

Specifically, in the latest announcement, Amazon charges an additional 5% “fuel fees and inflation effects” with sales partners using its storage and delivery services from the end of this month.

Before that, Amazon also once raised the fee with sales partners earlier this year. The company said this is in response to costs such as fuel and rising wages in the US, amid increasing demand for online shopping.

In 2021, the airline has delivered more than 3 billion packages and employed 750,000 warehouse workers since the beginning of the year to meet processing capacity.

Traditional Asian restaurants try to “keep prices”

Inflation comes from reasons that are often beyond the control of businesses. How customers can accept, this is what many business owners headache. There are sellers who choose to highlight the truth with packets of chips with a little less, or a box of pencils with a few pens less. However, there are also businesses that accept to suffer a little loss, rather than lose loyal customers.

Having sold kimchi in Seoul for decades, Ms. Choi has always been loyal to the criterion of “cheap and delicious”. Although the prices of many foods, including ingredients for making kimchi, have increased sharply since the beginning of the year, she is still looking for ways to shoulder the burden so that customers don’t have to buy expensive kimchi.

Inflation and business strategy

Choi Sun-hwa sells kimchi (traditional Korean side dish) at a traditional market in Seoul, South Korea. (Photo: Reuters)

“With the same amount of money, I used to buy 10 cabbages for kimchi, now only 7. I’m trying to keep the price, but it’s hard to last too long, so maybe soon I will raise the price a bit,” said Choi Sun-hwa, owner of a kimchi shop in Seoul.

The same story also happened with Mr. Wong – the owner of a longtime dimsum restaurant in Hong Kong (China). As in previous years, he only raised the price once by 1 Hong Kong dollar at the beginning of this year and then continued to keep the price, although food prices here have increased more than 4% in the past month, due to tight supply. from Mainland.

“During the pandemic, it’s very difficult to transport ingredients, the cost is high, but if I regularly raise the price, customers won’t come to eat anymore,” said Wong Charn-Chee, owner of a dim sum restaurant in Hong Kong (China), expressed.

Not so lucky, Mr. Yasuke’s Udon noodle shop in Tokyo (Japan) had to increase its selling price by 50 yen since the beginning of this month. Not a very large number, but for a popular store, this is also not very pleasant.

“We sell for only a few hundred yen a bowl, so raising the price by 50 yen is already a big deal, but I have no other way to stay in business,” said Yusuke Iwai, owner of a Udon noodle shop in Tokyo. (Japan), said.

Despite being in an uncomfortable period, traditional Asian shippers remain optimistic that the situation may soon improve. They can also be reassured that they still have the support of loyal customers, despite rising prices.

“Many types of costs are going up, so a slight price increase is inevitable, but I really like the dishes here. So even if the price increases, I will still come here to eat often,” said Ms. Tomomi Shimizu, customer, said.

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