May 22, 2024 - Economy

Price increases take a bite out of companies' reputation

Illustration of rating stars falling off a rating to reveal a one dollar bill beneath

Illustration: Sarah Grillo/Axios

The public's dissatisfaction with inflation is boiling over — and some of the biggest consumer brands in the country are feeling the heat.

Why it matters: Record price increases have ebbed, but the aftershocks are still reverberating.

The big picture: Companies such as Walmart, Macy's, McDonald's, Burger King, Amazon, Procter & Gamble, Costco, Kraft Heinz, Kohl's, Nike and Kroger registered a decline in their Reputation Quotient score in the Axios Harris Poll 100 from 2023 to 2024.

  • "Industries where consumers see price hikes for everyday items have declining trust," Harris Poll reports.

Zoom in: Trust scores fell by 3.8 percentage points for clothing companies, 3.2 points for quick-service restaurants, 2.9 points for big-box stores and 2.2 points for grocers.

Inflation has taken the form of sticker price increases and so-called "shrinkflation," when companies reduce sizes while maintaining or even increasing prices.

  • "It's really become a hot-button issue and a political talking point," CFRA Research analyst Garrett Nelson says, noting that the White House has called out companies for it.

Yes, but: Resilient consumers have not punished retailers in a meaningful way for price increases, says Nelson, noting that companies like Coca-Cola and PepsiCo have passed along higher costs with little blowback.

  • "The reality is that most consumers are creatures of habit — and most consumers really haven't changed their buying patterns all that much," he said.

What to watch: We may be seeing the early stages of a movement by major consumer companies to attract customers with price cuts or value plays.

  • Target on Monday said it would reduce "everyday regular prices" on about 5,000 "frequently shopped items," including milk, meat, bread, soda, fruit and vegetables.
  • McDonald's is introducing a limited-time $5 value meal.

The bottom line: Price hikes are leading to brand damage.

Go deeper: Read the full methodology behind the Axios Harris Poll 100.

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