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Sticker Shock

couponsPrice wars have gotten the best of the consumer packaged-goods industry, reports Serena Ng in The Wall Street Journal (4/4/14). "For decades, Americans’ purchases of basics like laundry soap and toothpaste roughly kept pace with the rate of growth in the overall economy … For the past three years running, unit sales of consumer products have been largely flat, according to market research firm Nielsen." Some of this is attributed to changing habits, and some to "a blitz of deals and coupons."

"People are eating less cereal and drinking less soda," for example. "Razorblade sales are down as many men shave less or grow beards. Pre-measured laundry soap capsules and high-efficiency machines require people to use less detergent. And more people are choosing freshly prepared food over packaged fare." Meanwhile, in categories including "soda, toilet paper and potato chips, more than 50% of consumers’ purchases include discounts, said Gary Stibel of New England Consulting Group."

Bill Schmitz, a Deutsche Bank analyst, comments: "When we see some of the promotional pricing out there, it’s pretty clear someone has lost their mind." P&G, Henkel, Georgia-Pacific and Colgate-Palmolive declined to comment, but Church & Dwight CEO Jim Craigie said this: "Price wars don’t help growth and are not good for the industry … They are the easiest things to start and the hardest to finish." Nielsen’s Doug Bennett notes that discounts can motivate product trial, but also train shoppers simply to wait for a better deal.