Though many businesses in the U.S. are hoping to raise their prices, many will have to weigh their options before implementing any changes. Walt Disney Co. is one of the few examples of companies who have successfully hiked their prices since 2009, recently raising its single-day admission prices to U.S. theme parks by up to 9.6%.
Companies like Kohl’s Corp., on the other hand, have had a harder time keeping their business once their prices increase. Two years ago the department store raised its prices only to send their shoppers elsewhere, and has been struggling to recover ever since.
Growth has been apparent throughout the States this year, but most Americans are still minimizing their spending.
“One of the early behaviors that we saw in the downturn was consumers trading down from higher to lower-priced products. You saw it in everything from soap to beer,” said Accenture managing director David Axson. “Consumer behavior, once it changes, takes a long time to change again.”
The change has been slow since the economy is still struggling.
“Typically, at this point we’d be much farther along, but recovering from a financial-led recession takes anywhere from seven to ten years, and we’re still a ways away,” Sam Bullard, senior economist at Wells Fargo, explained.
As a result, companies and retailers are cutting costs to bone in an effort to maintain profit margins. There is a limit though.
“At some point, they have to act on prices, and many have forgotten how to do it, and more importantly, have no educated their customers to expect it,” explained George Tacke of Simon- Kucher & Partners.