Record profits. If that doesn’t work then record quarterly profits. Not making profit? Then try for some record revenue to reach record profits. Got decent profit? Get more.
This is the model of the retail industry. This model hits everyone in the economy on some level regardless of how distanced they perceive themselves to be from the drive for more profit under any circumstances by retailers. We already know that almost every product in America has been off shored for manufacturing thanks to the retailers demands for increased margins. This is one of the obvious costs to US workers and the economy. There are less obvious and more ominous tactics used by retailers to increase profit at the expense of working Americans.
Here’s one example: the price of cotton. A year ago it was trading in the mid $90’s/100 lbs. It’s now down in the mid to low $80’s. When prices rose retailers raised the price of everything from garments to drop cloths to maintain their margins. Okay fine, their costs went up from their vendors. Now the raw materials price is dropping and the manufacturers, distributors and vendors are enjoying a few more points themselves, which is rare. Not so fast say the retailers, we want our price drop, based on raw materials cost, or you will lose our business to someone else willing to practically give us merchandise. Okay fine… vendors/distributors drop the price under retailer demands to keep the business. So as a consumer you should see your retail price go down in turn correct? Wrong.
Retailers establish industry or product base lines of what consumers are willing to pay and they stick. True, competitive discounts to consumers between retailers may cost them a point or two but it does not come close to the margin increases they enjoy as consumer prices rise and their procurement costs fall. In short, most big boxes don’t pass savings on to their customers. They pass them on to shareholders. Once again shareholder capitalism rears it ugly head. Stakeholders such as employees of Big Box, Inc. don’t enjoy wage increases along with product margin increases. Customers don’t enjoy price breaks. It’s Wall Street investors who enjoy the additional cash in the coffers and possible dividends. Placing investors above all else, a relatively new part of the American experiment, is unsustainable and works to greatly exaggerate the growing inequality in the United States which, despite any argument against the poor and the reason for being so, will lead to the countries ultimate demise. Stay tuned.