alt Hacker NewsI just love this idea that corporations just discovered greed during the pandemic and before that had been selflessly dedicated to selling goods for the benefit of mankind at the lowest price they possibly could. Companies always try to maximize prices, and they do that by trying to optimize the price they sell things at to sell as much as they possibly can at the highest price they can get away with. Sometimes you can get more profits by lowering prices and selling more stuff, sometimes by raising prices and selling less stuff. It's a trade off. Prices went up because of a series of demand and supply shocks enabled companies to raise prices. If they had not raised prices, there would have been shortages everywhere.
Replies
I think you're mistaking what's happening here. Companies are not discovering greed. People are finally recognizing that greed, and the greed inherent in the system, and recognizing that just because it's "part of the system", it's not OK.
I think there actually was a lot of surprise from executives coming out of COVID that they could raise prices so high without it impacting consumer demand in the ways they had previously predicted.
The Chipotle earnings calls were pretty much the prime example of this. CEO more or less expressing amazement at how elastic consumers were on pricing, and that due to the increases not impacting sales volume they planned to continue ramping until it did.
I think plenty of companies were operating off the idea that price competition was far more important than it turned out to be. I note the baskets of those shopping next to me in the grocery store and this rings true. Due to a myriad of reasons - consumer behavior being a large one of those - buying behavior based on price just isn’t as much of a thing as it was 30 years ago. Almost no one is shopping multiple supermarkets, buying cheaper alternatives, buying in-season veggies and fruit when it’s cheap, waiting for sales to stock up, buying in bulk and freezing, using coupons, meal planning based on the latest supermarket Sunday circular, etc. only a tiny minority of people have been doing so.
Couple that learned helplessness with the monopoly situation for many (most?) markets in the US and it’s no surprise to me that once the dam broke there is no going back. The price discovery moving forward is going to be much more aggressive. It will take a generation or three to get back to thrifty consumer behavior unless we see something actually painful to the average person on a scale of the Great Depression.