By Oonagh Phillips Editor in Chief, BW Confidential

At the height of the recession, retailers were frequently heard venting about the ever-rising prices of cosmetics and fragrances. Brands had been increasing their prices a year or two before the downturn and continued to do so while markets crashed. “Why are brands putting their prices up at a time when consumers are spending less; this is just bad economics,” one retail executive told BW Confidential.

Retailer anger may be about to bubble up again. Due to the rising price of oil and increased commodity costs, some major groups, such as P&G have already informed retailers in the US that they would be putting up prices of some of their basic consumer goods. And rising prices have already caused a stir in China. Consumer groups there recently came under scrutiny from the Chinese government for putting up the prices of shampoos and soaps due to hikes in commodity costs, which saw consumer stockpiling of these items. Swiss bank UBS also warned that inflation in China has accelerated more than in other emerging markets.

Companies may be feeling the pinch from higher costs, but so too are consumers. And if brands and retailers decide to pass the extra costs onto consumers, they may be forced to add a little more value to their propositions, in terms of flashier packaging or little extras so customers feel they are getting their money’s worth.

During the recession analysts pointed out that brands needed to play more on innovation than price and focus on making their products stand out to get consumers to part with their cash. And although the overall market may be recovering, price and value are still at the forefront of consumer buying decisions. So those strategies for surviving the recession and calls for more innovation may be just as relevant now as they were two years ago.

Oonagh Phillips Editor in Chief, BW Confidential