Raphael Stevens

Even as inflation cools, customers are still bristling at higher prices and say inflation is a major concern.
Walmart, Chipotle and Wendy’s are among the companies that have felt the ire of customers on social media.
As consumers show price sensitivity, Target, Aldi and McDonald’s have touted price cuts and value meals.

Courtesy: Walmart

Inflation may be cooling, but consumers’ outrage over higher prices is running hot.
TikTok users blasted Walmart for rolling out digital shelf labels that allow it to quickly raise and lower prices. Wendy’s backpedaled after its CEO suggested the burger chain may start using dynamic pricing, the practice of raising and lowering prices based on demand. And at some Chipotle locations, customers filmed workers to try to make sure they didn’t skimp on their burrito bowls.

The three joined a growing list of consumer brands contending with customers’ deep frustration over high prices — and wariness that prices will only rise more. Many retailers, restaurants and other consumer companies have seen sales fall as shoppers pull back their spending. Businesses are now trying to convince customers that they offer the best deals, fueling a rise in discounts, promotions and value meals.
Consumers are fed up with deceptive pricing, said Jean-Pierre Dubé, a professor of marketing at the University of Chicago Booth School of Business. They’ve seen smaller items on shelves, paid tacked-on fees and felt pressure to tip workers for things they didn’t tip for in the past.
“We’re reaching a boiling point on this,” he said.

The companies stocking grocery aisles contend consumer perception is skewed. Grocery prices have risen just 1% in the past year, according to data from the U.S. Bureau of Labor Statistics. But food at home prices have climbed more than 24% since May 2019, stretching consumers’ wallets and stoking anger with companies.
Consumers’ buying power has also increased as inflation cools and the job market remains strong, boosting real hourly earnings for the average private sector worker, according to the BLS data.

Other key costs are raising Americans’ expenses, such as electricity and rent, which have climbed over the last 12 months.
“People experience the price of consumer products constantly, and that does tend to be a focus of what they can remember buying last,” said David Chavern, president of the Consumer Brands Association, a trade group representing Coca-Cola, Procter & Gamble and dozens of other consumer packaged goods companies. “But the reality is that what’s happening in the grocery store, in the drug store has not been a source of material inflation over the last 12 to 18 months.”
In a Pew Research Center survey from May, 62% of U.S. adults said inflation was “a very big problem in the country today,” a higher percentage than any other issues they were asked about including illegal immigration, gun violence, violent crime and the federal budget deficit.
That percentage has held roughly steady, even as inflation cools. In the year-ago survey by Pew, 65% of Americans said inflation was a very big problem.
Inflation has also become a major talking point on the presidential campaign trail. Former President Donald Trump has blamed President Joe Biden, while has Biden accused companies of greed.

U.S. President Joe Biden delivers remarks on lowering costs for American families during a visit to Goffstown, New Hampshire, on March 11, 2024.
Kevin Lamarque | Reuters

Shrinkflation in the spotlight

Grocery inflation may be back to pre-pandemic levels, but that hasn’t eased the frustration of Americans who are paying way more than they did years ago.
Consumers, businesses and the Federal Reserve will get the latest read on inflation on Thursday, when the federal government reports the consumer price index for June.
Dianna Campbell, 69, a TV producer and consultant in Manhattan, said she’s noticed prices rising and staying high, whether it’s for laundry detergent or a restaurant meal.
“You’re paying more for it, but you’re giving me less, and the quality is worse,” she said.
Campbell isn’t the only consumer angry about shrinkflation, the practice of cutting an item’s size, but not its price.
Over the past year, the term has become a household phrase through references in pop culture and politics. In March, both the Cookie Monster and Biden called out shrinkflation by name, the former for reducing the size of his beloved treats and the latter for decimating Snickers bars. (Snickers’ parent company, Mars, denied skimping on the chocolate bars).
Customers have seen plenty of other examples on trips to the grocery store.
In a report on shrinkflation, Sen. Bob Casey, D-Pa., called out Gatorade for swapping out a 32-ounce bottle for a 28-ounce version and keeping the same price.
Gatorade denies that it changed its packaging for profits. PepsiCo spokesperson Andrea Foote told CNBC that the 28-ounce bottle of Gatorade has been around for more than a decade, and widening its distribution was part of the company’s long-term strategy, not a response to the current economic climate.
Retailers have also been accused of shrinking the size of private-label items. Walmart, for instance, cut the number of sheets in its Great Value paper towel rolls from 168 to 120 but did not reduce the price. Company spokeswoman Tricia Moriarty said it’s not shrinkflation because Walmart reformulated the product to make each sheet more absorbent.
Awareness of shrinking portions contributed to recent backlash against Chipotle. After some customers thought their burrito bowls were smaller, they began filming the workers making their orders and posting the videos on TikTok.

In an interview with Jim Cramer on CNBC’s “Mad Money” in late May, CEO Brian Niccol said Chipotle has not reduced portion sizes and described the TikTok trend of filming workers as “a little rude.”
“The whole thing is kind of crazy to me,” he said. “We’ve always said we want to give people great portions. We want to give them what they want.”
Wells Fargo analyst Zachary Fadem tested out the theory himself, ordering 75 burrito bowls from eight New York City Chipotle restaurants and weighing them. The burrito bowls’ weight varied based on location, leading the analyst to conclude that consistency was the issue — not shrinkflation.

A customer pays for their food at a Chipotle Mexican Grill restaurant on April 26, 2023 in Austin, Texas.
Brandon Bell | Getty Images

But the feeling of paying more and getting less isn’t just in consumers’ heads. It’s become a common experience when shoppers stock up on groceries and get ready for backyard barbecues.
This July Fourth, for example, customers paid an average of $71.22 for a cookout for 10 people, according to the American Farm Bureau Federation. That’s up 5% from last year and 30% from 2019.

Pricing pushback

Wendy’s and Walmart have also recently felt fury from consumers concerned they may get ripped off
In late February, the burger chain had to backpedal after CEO Kirk Tanner told investors that Wendy’s would test features as soon as 2025 that included “dynamic pricing” — such as adjusting menu prices to drive demand during slower times of the day. Wendy’s later said that it had no plans to raise prices when demand is highest and blamed misleading media reports for the uproar.

A Wendy’s Co. restaurant in the Queens borough of New York, US, on Wednesday, Feb. 28, 2024. 
Yuki Iwamura | Bloomberg | Getty Images

More recently, social media users criticized Walmart over its decision to roll out digital shelf labels, higher-tech price tags that allow it to quickly and easily change prices. The retailer said last month that it would add the technology to more of its stores and plans to have them in 2,300 locations, or roughly half of its U.S. footprint, by 2026.
On TikTok, some saw the move as the first step toward the nation’s largest retailer using dynamic pricing similar to Uber’s surge pricing.
Walmart, on the other hand, said the new price tags will cut a tedious task from store workers’ to-do lists. Digital shelf labels are designed to save time, Walmart spokeswoman Cristina Rodrigues said. They have LED lights that blink to guide store workers who are restocking items or to help them find products for a customer’s online order. They eliminate the need for store workers to swap out traditional paper tags.
She said Walmart has “no plan to change the frequency or implement different pricing methods.” Rodrigues said all price changes will still be approved by the merchandising team. With the tech, a store worker has to stand in front of the shelf and use a mobile app to raise or lower the price, she said.
Dubé of the University of Chicago said the pushback comes from years of shoppers feeling ripped off by price increases.
“Consumers’ automatic reaction is, ‘This sounds like yet another unfair thing firms are going to do to try and cheat us,'” he said. “The presumption is this is just another attempt to screw them over.”
But he added dynamic pricing can have silver linings if restaurants and retailers pursue it. Prices can go down as well as up, he said. In Europe, for example, some grocery stores cut prices toward the end of the day to accelerate sales of baked goods or perishable items and reduce food waste. If Wendy’s lowered prices during slower times, he said customers could actually get cheaper meals.

Shoppers at a Walmart store in Secaucus, New Jersey, US, on Tuesday, March 5, 2024.
Gabby Jones | Bloomberg | Getty Images

More price cuts, value meals

But consumers don’t have to wait much longer to start seeing lower prices.
As foot traffic declines for retailers and restaurants, some are leaning into value to bring back customers. Over the past couple of months, Target, McDonald’s, Aldi and others have stepped up price cuts and debuted new deals for customers.
Walmart said it rolled back prices on nearly 7,000 items in its food categories in the first quarter of the year. Amazon-owned Whole Foods reduced prices over the last six months on about 25% of its items, including nearly 900 of its private-label items. And a slew of fast-food chains, from McDonald’s to Starbucks to Burger King, have recently unveiled new value meals to drive sales.
Consumer packaged goods companies are also reversing course as their volumes decline and investors fret over lagging sales. During Covid, companies like Mondelez stopped promotions as they focused on keeping up with demand and navigating supply chain snarls.
But now Mondelez is one of the companies looking to bring back consumers with lower prices. The snacking company, which owns Oreos and Clif bars, is expecting a challenging year for its U.S. business, as low-income consumers buy its cookies and crackers less frequently. Mondelez executives said in June that they’re planning promotions for brands like Chips Ahoy!, which tends to lose ground to cheaper private-label options. The company also cut prices on some of its larger pack sizes.
“The top priority is really to keep on growing the company and keep on delivering volume growth,” Mondelez CFO Luca Zaramella said at the Evercore ISI Consumer & Retail Conference last month.
Kroger, which carries many of those items, has noticed that trend, too.
Kroger CEO Rodney McMullen said on an earnings call in mid-June that brands are spending more of their own money to offer discounts to customers and drive more volume. And he said the level of promotions is similar to pre-pandemic.
It remains to be seen whether companies can tamp down consumer outrage as the deals and discounts start to take hold.

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Higher payroll and other expenses are eating into airline profits despite strong travel demand.
Airlines have ramped up U.S. capacity, forcing some carriers to discount fares in off-peak periods.
Delta, the country’s most profitable airline, kicks off airline earnings season on July 11

Passengers pass through O’Hare airport in Chicago, July 3, 2024.
Scott Olson | Getty Images

Record summer air travel demand isn’t translating to record U.S. airline profits. Carriers will have to answer for that disconnect when they report quarterly results this month.
Some airlines have forecast record demand, and in some cases, revenue. But higher labor and other costs have eaten into airlines’ bottom lines. To adapt to slower demand growth and other challenges, some carriers have slowed if not halted hiring compared with hiring sprees when they rebuilt after the pandemic.

And some airlines are facing delays of new, more fuel-efficient aircraft from Airbus and Boeing at the same time that a Pratt & Whitney engine recall has grounded dozens of jets.

Yet U.S. airlines have increased capacity, flying about 6% more seats in July than they did in July 2023, according to aviation data firm OAG. The expansion is keeping airfare in check, and stocks in the sector have fallen behind the broader market.
The NYSE Arca Airline Index, which tracks 16 mostly U.S. airlines, is down almost 19% this year, while the S&P 500 has advanced more than 16%.

‘Clear as mud’

What the third quarter will look like for airlines is “clear as mud,” Raymond James analyst Savanthi Syth said in a note Friday, citing headwinds such as potentially weaker spending from coach-class clientele, the Paris Olympics’ impact on some Europe bookings, and possible changes in corporate travel demand.

Also, some travelers have been opting for trips in late spring and early summer, raising questions about late-summer demand.

Investors will get more insight into the traditionally slower tail end of summer and the rest of the year when airlines report quarterly results, starting with Delta Air Lines on Thursday.
Analysts consider Delta the best of the bunch, thanks in large part to the airline’s success in marketing more expensive, premium seats and its lucrative deal with American Express.
In April, Delta, the most profitable U.S. airline, forecast quarterly adjusted earnings of $2.20 to $2.50 a share for the second quarter, which would be down from the adjusted $2.68 a share it brought in a year earlier.
Delta, its rival United Airlines, which reports the following week, and Alaska Airlines are top picks for Wolfe Research airline analyst Scott Group, who said in a June 28 research note that the three have less earnings risk and better free cash flow than other carriers.
Shares of Delta and United are each up about 14% this year through July 5, the standouts in a sector that is mostly down this year. Alaska shares are down about 2%.

Cheaper fares

Airports are bustling this summer. Nearly 3 million people, setting a record, passed through U.S. airport checkpoints on June 23 alone, according to theTransportation Security Administration.
Airlines have been expanding their schedules, both domestically and internationally, pushing down fares. U.S.-Europe capacity for July is up nearly 8% from a year ago, according to consulting firm Airline/Aircraft Projects, with new routes largely targeting leisure travelers.
Fare-tracking company Hopper reported in June that summer flights between the U.S. and Europe in coach were going for $892 on average, compared with $1,065 for summer 2023.
Airfare was down nearly 6% in May from a year earlier, according to the latest U.S. inflation data.

Lowered forecasts

Despite higher numbers of passengers, some carriers have admitted weaker sales than expected because of the increased flights. American Airlines on May 28 cut its second-quarter revenue and profit forecasts and announced its chief commercial officer was leaving after a sales strategy backfired.
“The domestic supply and demand imbalance has led to a weaker domestic pricing environment than we had forecast,” American Airlines CEO Robert Isom said at a Bernstein industry conference the next day. “There’s more discounting activity than we saw a year ago. Now, industry capacity is expected to come down in the second half of the year, and that should help.”

Travelers at New York’s LaGuardia Airport
Leslie Josephs/CNBC

Southwest Airlines cut its second-quarter forecast in late June, citing shifting demand patterns. The Dallas-based airline is under pressure to quickly change its long-profitable business model — which has no seat assignments and one class of service — as big rivals such as United and Delta tout strong growth from premium cabins.
The airline is trying to fend off activist investor Elliott Investment Management, which disclosed a nearly $2 billion stake in the carrier in June and called for a leadership change.
“We will adapt as our customers’ needs adapt,” Southwest CEO Bob Jordan said at an industry event hosted by Politico on June 12, discussing potential new revenue initiatives.
Both American and Southwest report second-quarter results toward the end of July.

Making changes

Some money-losing carriers, such as JetBlue Airways and Frontier Airlines, are already making changes.
JetBlue has been cutting unprofitable flights this year and making sure that planes outfitted with its high-end Mint business cabin, where tickets can go for more than four times a coach fare, is on the right routes.
Meanwhile Frontier Airlines and fellow discounter Spirit Airlines have done away with change fees for standard coach tickets and above, following larger, legacy carriers’ move during the pandemic. Both budget airlines announced in May that they will start offering bundled fares to include seat assignments and other add-ons that they used to charge for.
Spirit, which is struggling with the fallout from a judge’s ruling that blocked JetBlue from buying the airline, and is the most affected by the Pratt engine grounding, last week warned some 200 pilots they could be furloughed this year, according to the pilots union.
At Spirit’s annual shareholder meeting in June, CEO Ted Christie brushed off suggestions that Spirit is considering filing for Chapter 11 bankruptcy protection, with a more than $1 billion debt payment due in September 2025. More

Help Wanted

The semiconductor industry is recruiting workers in a tight labor market as the competition for talent ramps up and funding from the CHIPS and Science Act continues to be dispersed.
It is also staring down a projected shortfall of as much as one million workers in the broader U.S. economy by 2030.
GlobalFoundries, the third-largest chipmaker globally, is casting a wide net to recruit talent.
The company has sought out veteran candidates, along with employees from workforce reentry programs and an initiative for women in construction.

The semiconductor industry is recruiting workers in a tight labor market as the competition for talent ramps up and funding from the CHIPS and Science Act designed to spur domestic production continues to be dispersed.
It is also staring down a projected shortfall of as much as one million workers in the broader U.S. economy by 2030 as generative artificial intelligence adds fuel to the in-demand sector.

The U.S. chips industry is expected face a shortage of 67,000 technicians, computer scientists and engineers by 2030, while the broader U.S. economy is set to have a gap of 1.4 million such workers, according to a 2023 study from the Semiconductor Industry Association.
A separate study from Deloitte found the talent crunch in the semiconductor space could get even worse due to the global economic environment and ongoing supply chain issues.

A wafer sorter inside the GlobalFoundries semiconductor manufacturing facility in Malta, New York, on June 18, 2024.
Cindy Schultz | Bloomberg | Getty Images

GlobalFoundries, the third-largest chipmaker globally, is casting a wide net to recruit talent. The company has sought out veteran candidates, along with candidates from its own workforce reentry program and an initiative for women in construction.
The company creates chips for everyday products from electronics and phones to autos, in addition to components for space and defense. Major clients include General Motors and Lockheed Martin.
In 2021, the company launched the sector’s first registered apprenticeship program, which is full time and paid with benefits, with training at no cost to the apprentice. It is completed in two years or less, and requires only a high school diploma or equivalent and interest in the mechanical field. Some 50 apprentices have gone through the program so far, the company said. It has recruited graduates with technical associate degrees from regional community colleges and veterans transitioning out of the military for the program.

GlobalFoundries is working to fill hundreds of roles at a time worldwide, and hires thousands annually, a pace it expects to continue, Chief People Officer Pradheepa Raman told CNBC in an interview. Raman said keeping the same size workforce is “not an option” for the industry as demand soars. The needs range from technicians to product managers and corporate roles. 
“It’s why we are very, very aggressive when it comes to our workforce development efforts,” Raman said. “And if you’re not getting traditional talent, [the solution is] cross-training talent, identifying alternate talent pools, people who are doing things in different fields, showing them that this is a very welcoming set of opportunities that exists within the semiconductor industry, is our approach.”

The GlobalFoundries semiconductor manufacturing facility in Malta, New York, on June 18, 2024.
Cindy Schultz | Bloomberg | Getty Images

Workers also have room for advancement, and training and retaining existing workers is key in this competitive environment. Morgan Woods, 28, started out in Malta, New York, at GlobalFoundries’ fab facility as a technician in 2021. Woods has now moved into a training and development analyst role with the company, overseeing training for technicians, engineers and management, plus ensuring compliance. Woods said compliance is crucial as the company expands into the automotive space, working with GM.
“As the demand for the microchips increases, we definitely need more manpower to help support the constant rollout of microchips and meeting our daily targets,” Woods said. 
Woods has taken advantage of a benefit from GlobalFoundries launched in May, allowing eligible U.S.-based employees and new hires to receive a tax-free lifetime total of $28,500 toward student debt. It includes qualified loans for all degree types and credit-based certificate programs offered by U.S. universities and colleges. So far, the number of applicants has topped 200, exceeding expectations, the company said.
“By participating in this program, I will be in a much better financial position to purchase a home within the next few years, as well as look at expanding my family and having children,” Woods said. 
Beyond helping to create roles in engineering and computer science, funding from the CHIPS and Science Act will also bolster growth for GlobalFoundries’ manufacturing fabs in New York and Vermont. In February, the company announced $1.5 billion in planned CHIPS funding to expand manufacturing capacity. It projects that funding, along with local and state money, will help create some 1,500 manufacturing jobs and 9,000 construction jobs over the lifetime of planned projects.
Manufacturing and construction have faced worker shortages of their own recently, and aim to lure new and younger hires to the field.
“We believe the challenges that we face in recruiting can be solved through an ecosystem approach of workforce development and making our organization one of the best places to work through the benefits offerings that we have been providing,” Raman said.

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Saks Fifth Avenue parent HBC said Thursday that it would purchase Neiman Marcus Group in a deal valued at $2.65 billion.
The combination will establish Saks Global, which will include Saks Fifth Avenue, Saks OFF 5TH, Neiman Marcus’ namesake department store chain and Bergdorf Goodman.
The deal comes amid what’s been a turbulent period for traditional brick-and-mortar retail in the wake of the ecommerce boom.

Saks Fifth Avenue store at the Waterside Shops. 
John Greim | Lightrocket | Getty Images

Saks Fifth Avenue parent HBC said on Thursday it will acquire Neiman Marcus Group in a $2.65 billion deal combining the storied retailers.
The combination will establish Saks Global, which will include Saks Fifth Avenue, Saks OFF 5TH, Neiman Marcus’ namesake department store chain and Bergdorf Goodman.

“We’re thrilled to take this step in bringing together these iconic luxury names,” HBC CEO Richard Baker. said in a statement. “For years, many in the industry have anticipated this transaction and the benefits it would drive for customers, partners and employees.”
“This is an exciting time in luxury retail,” Baker added, citing technological advancements that can “redefine” the customer experience. He was one of several executives between the two companies pointing to technology as a point of focus going forward.
As part of the deal, Saks.com CEO Marc Metrick will take the chief executive role for the Saks Global business. Ian Putnam, president and CEO of HBC Properties and Investments, will become CEO of Saks Global’s property and investments business. Both will report to Baker, who will serve as executive chairman at Saks Global.
Neiman Marcus Group CEO Geoffroy van Raemdonck called the partnership a “proactive choice in an evolving retail landscape.”
The deal comes amid what’s been a turbulent period for traditional brick-and-mortar retail in the wake of the ecommerce boom. That strain was exacerbated by post-pandemic demand for experiences, which pushed consumers to shell out for restaurants or travel instead of goods they stocked up on during lockdown.
The department store segment in particular has struggled to attract younger shoppers amid a broader pullback in discretionary spending. More

Patrick Bertoletti won Nathan’s Hot Dog Eating Contest, the annual competition held on July 4, with 58 dogs consumed. Miki Sudo won the women’s division with 51 dogs.
After the beef between 16-time winner Joey Chestnut and Major League Eating, the contest was considered much more wide open than in the past several years.
MLE announced last month that it was parting ways with Chestnut, citing a rule that participants cannot strike endorsement deals with rivals of hot dog maker Nathan’s.

Patrick Bertoletti, Geoffrey Esper and other contestants compete in the 2024 Nathan’s Famous Fourth of July International Hot Dog Eating Contest at Coney Island in New York City, U.S., July 4, 2024.
Jeenah Moon | Reuters

There’s a new top dog in the frankfurter eating world.
Patrick Bertoletti won Nathan’s Hot Dog Eating Contest, the annual competition held on July 4, marking the end of an era after 16-time winner Joey Chestnut’s falling out with the event’s organizer, Major League Eating.

Bertoletti, 39, from Illinois, consumed 58 hot dogs in this year’s 10-minute event, earning him the Mustard Yellow Belt in the men’s category. Miki Sudo set a new record in the women’s division with 51 wieners downed. After the beef between Chestnut and MLE, the contest was considered much more wide open than in the past several years.
MLE announced last month that it was parting ways with Chestnut, citing a rule that participants cannot strike endorsement deals with rivals of hot dog maker Nathan’s. MLE alleged at the time that Chestnut had partnered with a plant-based meat alternative company. Chestnut, also known as “Jaws,” has recently begun posting images on Instagram that feature Impossible Foods.
“For nearly two decades we have worked under the same basic hot dog exclusivity provisions,” the MLE said in a statement in June. “However, it seems that Joey and his managers have prioritized a new partnership with a different hot dog brand over our long-time relationship.”

Miki Sudo reacts as she wins women’s division of the 2024 Nathan’s Famous Fourth of July International Hot Dog Eating Contest at Coney Island in New York City, U.S., July 4, 2024.
Jeenah Moon | Reuters

Chestnut responded in a statement at the time that he was “gutted to learn from the media” of his banishment after 19 years. The 40-year-old claimed he did not have a contract with MLE or Nathan’s, and said the endorsement ban was a departure from the organization’s rules around partnerships in prior years.
“I love competing in that event, I love celebrating America with my fans all over this great country on the 4th and I have been training to defend my title,” he said last month.

While the relationship appears fried for the time being, the MLE called Chestnut an “American hero” and said it would “love” for him to return when not representing a Nathan’s competitor. Chestnut holds eating records in 55 categories, including eggs, chicken wings and apple pies, the MLE told NBC News.
Nathan’s website also still showers Chestnut in praise. In a section announcing his 2023 win, the New York-based company wrote that “there’s no doubt in our mind who’s the king.”

People wear hot dog outfits, as they attend the 2024 Nathan’s Famous Fourth of July International Hot Dog Eating Contest, at Coney Island, in New York City, U.S., July 4, 2024
Kent J. Edwards | Reuters

During ESPN’s broadcast of the 2024 contest, the channel made several mentions of Chestnut and what the competition looks like without him. In one reference, Chestnut was referred to as the “Warren Buffett of the buffet.”
Chestnut fans can still see him in action this holiday.
He’s livestreaming a hot dog eating contest from the Fort Bliss army base in Texas as a fundraiser for charity, according to a recent Instagram post. The show begins at 5 p.m. ET on Thursday.
“The 4th wouldn’t be the same if I wasn’t celebrating by eating a whole lot of all-beef hot dogs,” he wrote. More