Snack Prices Surge, Debt Hits $1.3T, Retail Closing | Numbers Scream Ep. 18

This week's "Numbers Scream" focuses on retail trends, which are reflecting broader economic shifts. The discussion highlights several key areas: "snackflation," the pricing strategies of major brands like Doritos and Pepsi, the surge in credit card debt, the rise of "buy now, pay later" (BNPL) services, and the increasing number of retail store closures. First, "snackflation" is a significant concern. The price of popular snacks, such as a bag of chips, has increased by 50% in the last five years, from $4 to $6, with some instances of a $7 bag of Doritos. This contrasts sharply with healthier snack options like bananas and apples, whose prices have seen much smaller increases over the same period. Bananas went from 60 cents to 66 cents a pound, and apples from $1.35 to $1.55 a pound. This disproportionate increase in snack prices suggests a shift in consumer spending habits, potentially away from these higher-priced discretionary items. This leads directly to the second point: Doritos and Pepsi's pricing strategy and its consequences. Despite warnings from retailers like Walmart about customer pushback, PepsiCo, which owns Doritos, insisted on a $7 price point for a bag of chips, attributing it to inflation, fuel costs, and ingredient expenses. However, this strategy appears to have backfired, as Pepsi reportedly missed its sales forecast by a billion dollars in both 2024 and 2025. The company's stock price has dropped significantly, from over $180 per share to $155 per share, erasing billions in market value. This demonstrates that even major brands can suffer significant losses when they fail to align their pricing with consumer affordability and retailer feedback. Third, the American consumer is grappling with a staggering $1.3 trillion in credit card debt. This debt bonanza, rather than a genuine economic recovery, is a major concern for the retail sector, particularly for discretionary purchases. When consumers are maxed out on their credit cards, they are forced to cut back on non-essential items like new TVs, iPhone upgrades, or even extra clothing for children. This high level of debt indicates that many Americans are struggling financially and need economic relief, such as an end to conflicts that drive up oil prices, or reduced electricity costs, to free up funds to pay down their debts. Fourth, the "buy now, pay later" (BNPL) phenomenon, or "buy now, poor later" as it's referred to, is gaining traction, often as an alternative to maxed-out credit cards. A concerning statistic reveals that 54% of Americans cannot cover a $400 emergency expense in cash. For those using BNPL, the percentage of late payments on the first or second installment is projected to reach 47% in 2026, up from 34% in 2024. This indicates a growing number of consumers are struggling to meet even these short-term payment plans. The primary items purchased using BNPL include clothing, shoes, and accessories (with 60% of these purchases for children), technology devices, and surprisingly, groceries. The fact that groceries are a significant BNPL category underscores the severity of the affordability crisis facing American consumers. While auto repair and medical/dental expenses might be expected BNPL uses for unexpected costs, the prevalence of everyday items like clothing and groceries highlights the extent of financial strain. Finally, the cumulative effect of these factors is a significant increase in retail store closures, dubbed the "retail squeeze." After a period of closures leading into and during COVID-19, the number of store closures surged again to 8,200 in 2023, similar to the first year of the pandemic. In 2024, 7,900 stores are anticipated to close. While an estimated 5,500 new retail locations are expected to open this year, this still represents a net loss of 2,200 stores. Even large chains like Saks Fifth Avenue are reducing their physical footprint by closing locations. This trend is a natural part of capitalism, where businesses that don't adapt close, but the current high rate of closures is attributed to economic hardship rather than just natural market adjustments. A healthy capitalist environment would see more openings than closures, reflecting innovation and consumer demand. The current situation suggests an economy that is "biting people," causing widespread hardship for both businesses and consumers.