Under ‘Amazon Effect’ Retailers Could Be More Exposed To Supply Shocks

Growing online competition is not only forcing retailers to hold prices constant across geographic regions, but it is also pushing companies to adjust their prices more frequently, according to new research. When combined, those effects can make retail prices more sensitive to countrywide shocks in gasoline prices or import tariffs, according to a paper presented at the Federal Reserve’s annual symposium last weekend. What that could translate to is a new, more responsive retail sector that quickly passes costs such as oil spikes or tariffs on to consumers. Much of the existing conversation devoted to the so-called Amazon effect has revolved around the downward pressure e-commerce has had on the price of consumer goods, but that focus may be short-sighted. Read more at CNBC.