Dive Brief:
- As cost pressures ease, At Home has enacted permanent price drops on thousands of items such as furniture, rugs and decor, the retailer announced on Wednesday.
- The company raised prices last year after supply chain expenses increased by over $300 million from 2021 to 2022. Freight costs have since improved, allowing the retailer to cut prices.
- “Last year we had extraordinary cost increases in our supply chain, which led to us raising prices – which we were reluctant to do. We committed to ourselves that we would drop prices as soon as we could,” Chairman and CEO Lee Bird said in a statement.
Dive Insight:
At Home is dropping its prices after improvements in freight costs and other supply chain savings, but will continue to evaluate “our margins and the market,” Chief Merchandising and Product Officer Chad Stauffer said in a statement.
“As we see inflation continue to impact our customer from the gas pump to the grocery store, it is more important than ever we pass our savings to the customer. Passing on these supply chain cost savings will provide customers more purchasing power for the home items they desire,” Stauffer said. “Great value is important to our customer and critical to ensuring the entire economy stays healthy by enabling more customers to buy.”
Both retailers and consumers have made changes in response to rising inflation. Per a PwC survey released in February, 69% of respondents said they would reduce their nonessential spending over the next six months, and 15% said they would stop spending on nonessential purchases altogether. Meanwhile, some retailers have begun pushing back on increasing supplier costs to keep prices low.
At Home is rebalancing its product pricing as it faces financial challenges. In response to the company’s weak sales and cash flow, S&P Global Ratings in September downgraded At Home Group’s corporate credit rating from B to B-, adding that the ratings agency could lower the retailer’s rating again if things do not improve. Elevated freight costs was another reason for the downgrade, which At Home appears to be tackling.
Though rising homeownership rates and remote work drove demand for home improvement and decor products earlier in the pandemic, consumers’ desire for such goods appears to have cooled. Furniture and home retail sales were stagnant in February, according to data from the U.S. Commerce Department.
