Shelf shock: What made consumer goods cost skyrocket? Huong Vu October 16, 2023

Shelf shock: What made consumer goods cost skyrocket?

Shelf shock: What made consumer goods cost skyrocket?

The Covid-19 crisis has put pressure on many sectors and their goods because of various elements like challenges in recruitment and shelf shock. What is shelf shock? What made consumer goods costs skyrocket? Check out this post for the answer.

What is shelf shock?

Shelf shock means the price of the products has increased from one week to another compared to the old price. The product cost is skyrocketing at such a speed that business analysts have come up with a new word to call it, shelf shock. For example, in the United Kingdom, the cost of many essential commodity goods has seen an increase by over 11% as opposed to March in 2021. Nestlé has also sold products at a higher price (by more than 5%) in the first three months of 2022. That increasing costs for production are projected to force another price rise before too long.

Shelf shock: What made consumer goods costs skyrocket?

Reduced content

The increasing cost of all the things, for example, corn and berries, is challenging supermarkets and food manufacturers. They have to resort to deciding if you should raise the tag price or decrease the product content and charge the same unit price. Often, customers decide to buy depending more on the price than looking at the total amount contained. That is why some businesses go with the latter. For instance, some cut down on the content of the product while keeping the same price and the same size of the package.

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Smaller size

Tillamook is one of the firms that choose to shrink the packaging. In this way, they can reduce the cost per carton. Some businesses reduce the sizes of their goods just to keep them in stock. For example, Costco has adjusted the packaging of their paper towel so that it contains fewer sheets on each roll. They do that because of the higher and higher need for goods following shortages during Covid-19. Accordingly, the discount chain can raise the unit quantity it sells and ensure the paper towels available.

Higher grocery bills

Lots of people in the United States have faced shelf shock at grocery stores. Costs on average increased by over 3% throughout various consumer packaged products from March to the middle of May last year, as opposed to the year-ago period. When it comes to household cleaning items, the price has risen over 7% from the same period in 2020. When you compare it with the costs before March 2020 when Covid-19 impacted the economy, you can notice that shoppers are paying from 7% to 10% more all over the grocery aisles. 

The reason for the situation is an imbalance in need and supply. Regardless of the reopening of the economy, it still does not fail to challenge businesses. For example, dining businesses that stopped buying supplies when Covid-19 impacted the economy are increasing their orders to satisfy the exponential need from diners. In conclusion, we hope this post helps you understand more about shelf shock. Reach us to learn more.

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