Retail Competition Continues to Hold Prices Down

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Prices are low, and they’re not getting any higher.

That’s the news delivered by Bloomberg in an article that looks at technology’s affect on shopping and retail.

While a good dose of inflation typically helps businesses boost profits, trends in retail are conspiring to keep higher prices at bay.

Retailers are being held hostage by consumers who can readily check prices on items before they buy. This price transparency has resulted in fierce competition, with stores battling it out to be the lowest cost provider—which in turn has fueled a race around the globe in search of the lowest labor costs.

According to a report from PricewaterhouseCoopers, 47 percent of survey respondents around the world use Amazon to check prices before they buy. And the U.S. is one of four countries where consumers head to stores less often because of their reliance on e-commerce.

The result? A consumer price index for apparel that’s basically flat lined.

And the fashion industry isn’t alone. The grocery sector is also hurting from deflationary prices with even big boxes like Walmart getting squeezed by the likes of European discounter Aldi, which is refurbishing its stores to escalate the fight. The battle will get even more fierce now that rival Lidl is slated to open 20 stores in the U.S.

But the pain is being felt worldwide. Canada’s Loblaw grocery chain is ramping up discounts as it tries to compete with low price giants. In Japan, the consumer price index is being dragged down by cheap mobile phones, and in China, which had predicted a 3 percent increase in consumer prices, prices only inched up 1.2% in April.

Investors seem to have lost hope that inflation will pick up this year. And the International Monetary Fund predicts average inflation for G7 countries will be below 2 percent.


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