The year 2021 was a short-lived golden age for retailers. Consumer demand came roaring back from its pandemic lows with such ferocity that many were able to boost profits even as supply chain costs spiraled.
But with demand plummeting as consumers remain pressured, many retailers are caught between still-high product costs and falling or middling sales. As retailers watch costs fall for their suppliers, some see a path to holding down further price hikes — though few have been successful to date.
In a recent white paper, David Bassuk, a managing director with consultancy AlixPartners, wrote that despite “measurable declines” in input commodities, “pushing back on suppliers has proven to be harder than anticipated” because of high labor costs.
“Manufacturers have been steadfast: While prices went up like a rocket, they are coming down like a parachute,” Bassuk added.
An analysis of Mintec Global data by AlixPartners found most commodity input costs fell last year from their previous peaks, with ocean freight, cotton, steel and lumber seeing some of the biggest drops.