From FedEx to airlines, companies are starting to lose their pricing power – By Leslie Josephs (CNBC) / Dec 29, 2023
- After years of strong consumer spending, some companies are now finding the limits of their pricing power.
- Companies including FedEx, Target and General Mills have cut their sales outlooks, while airlines have slashed off-peak fares.
- Faced with slipping demand, more price-sensitive consumers, easing inflation and better supply, some companies are looking for ways to grow profits without price hikes.
After years of unbridled consumer spending on everything from home improvement to dream vacations, some companies are now finding the limits of their pricing power.
Shipping giant FedEx last week said customers have shied away from speedier, pricier shipping options. Airlines including Southwest discounted off-peak fares in the fall. The likes of Target and Cheerios maker General Mills have cut their sales outlooks as more consumers watch their budgets.
It’s a shift from the recent years when consumers spent at a breakneck pace — and at high prices — lifting corporate revenues to new records. But faced with weakening demand, more price-sensitive consumers, easing inflation and better supply, some sectors are now forced to find profit growth without the tailwind of price hikes.
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