In a highly competitive environment, retailers cannot engage in the practice of price gouging, said Target CEO Brian Cornell.
Vice President Kamala Harris recently proposed the first-ever federal price gouging ban on the food and grocery industries. Harris and other White House officials have claimed that businesses are taking advantage of the economic climate and overcharging customers by sharply raising prices to pad their profits.
“It’s a very competitive space,” he said, explaining that the industry faces small profit margins.
The Target executive noted that retailers must be responsible to consumers because they possess the power to seek lower prices and other products by scanning their phones or visiting other stores.
The Minnesota-based company has joined the crowd of other retailers that have responded to shoppers’ concerns.
While many retail outfits attempting to bring prices down amid more cost-conscious shoppers and slowing consumer demand, Walmart says inflation remains “more stubborn,” particularly for dry groceries and processed foods.
Debate About Price Gouging
Earlier this year, the current administration launched a joint Federal Trade Commission and Department of Justice task force to combat what officials say is illegal and unfair corporate pricing for food, rent, pharmaceuticals, and other goods and services.Fed officials and economists have expressed doubt that corporate gouging has contributed to the rampant price inflation over the last few years.
“An increase in pricing power would be reflected in price-cost markups, leading to higher inflation; likewise, a decline in pricing power and markups could alleviate inflation pressures,” they wrote. “The aggregate markup across all sectors of the economy, which is more relevant for inflation, has stayed essentially flat during the post-pandemic recovery.”
“If you look at any given moment, that markup sort of the difference between what’s happening to prices and what’s happening to costs that can vary a lot over the business cycle,” Goolsbee said. “So, I just caution everybody over concluding from any one observation about markups.”
Fed Chair Jerome Powell, too, dismissed the idea that corporate price gouging is contributing to inflation.
This year, lawmakers have stepped up efforts to fight what they deem is price gouging and shrinkflation—the act of raising prices by shrinking product sizes.
“It is outrageous that as families continue to struggle to pay to put food on the table, grocery giants like Kroger continue to roll out surge pricing and other corporate profiteering schemes,” the lawmakers wrote.
A growing number of companies have embraced electronic shelving labels as part of broader dynamic pricing strategies.
Proponents say electronic shelving labels can lower customers’ prices over time because retailers can automate pricing updates and exploit the most recent data on a centralized pricing platform. Critics claim they will increase prices for consumers because dynamic pricing could help companies charge more for a product during times of the day when it is in higher demand.
Meanwhile, the public seems to support the flood of price-gouging claims.