WSJ What’s News - The Battle for Grocery Shelf Space Is Heating Up

Episode Date: August 14, 2024

P.M. Edition for Aug. 14. There is an escalating fight for shelf space at U.S. grocery stores. WSJ reporter Jennifer Williams breaks down what food makers and others are doing to secure prime, eye-level spots. Meanwhile, inflation moderated last month, setting up the Federal Reserve for a rate cut next month. WSJ markets reporter Sam Goldfarb joins. Plus, one of the hottest jobs in tech pays six figures—and doesn’t require a college degree. WSJ workplace reporter Te-Ping Chen explains. Chip Cutter hosts. Sign up for the WSJ's free What's News newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

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for info on kraken's undertaking to register in Canada. U.S. inflation is cooling, setting the stage for a September rate cut. And the fight for consumers' attention is moving to grocery stores. Consumers want to spend less on their groceries and retailers as a result are being more selective about the products on their shelves. A lot of grocers and super centers are putting more of their own brands on shelf space which just adds to the fight for real estate. Plus one of the hottest tech jobs pays six figures with no college degree required. The

necessary skills, a flair with a screwdriver, and a high tolerance for artificial lighting. It's Wednesday, August 14th. I'm Chip Cutter for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today. Inflation is slowing, and that's likely to seal the case for the Federal Reserve to cut interest rates next month.

The Consumer Price Index showed CPI rose 2.9% in the past 12 months through July, and that was below economists' expectations for 3%. My colleague Sam Goldfarb joins us to explain. Sam, thanks for being here. Thank you. So walk us through today's report. What did it show and what stands out to you as significant? It was just a good report across categories, everything except housing, inflation was slowing

as it has been in previous months. Mostly this was just a meets expectations report and that was a good thing because the expectation is broadly that inflation is going to be slowly coming back down to the Fed's 2% target after the first three months of the year when that was a little bit more in question. So how does this influence what the Fed might do next?

So most people had already expected the Fed to cut rates at its next meeting in September. This good report just solidifies that. If inflation is in a reasonably good place or heading in the right direction, that makes the Fed able to focus more on the job market Just so happens that the latest jobs report wasn't great And so they have even more reason to cut is it sort of the case that the Fed might be more concerned about the job Market than inflation if we're getting readings like this Absolutely, you have basically two things happening at the same time one that inflation is getting better and the other that the job market is getting worse

Um, so for such a long time we were really focused on inflation because it was too high and meanwhile the job market was very good. So there's been a switcheroo. So where are prices starting to moderate and where do they remain high? It really just is across the board that inflation is moderating whether that's goods and at the same time services, everything from childcare to car repair, that's also getting better. And housing has been a little bit of a sticky problem, but it's not worrying economists too much because they still think it will continue to come down.

But many consumers still have a sense that prices remain elevated. The sort of negative consumer sentiment a lot of people sort of attribute it to just the fact that even if inflation is coming down, inflation is still prices going up. And so prices are still much higher than they were a few years ago. At some point people might start to adjust to the price levels as they are now and kind of enjoy the lower inflation, but it just hasn't quite happened yet. That was WSJ Markets reporter Sam Goldfarb. In the markets, the S&P 500 edged higher after the fresh inflation data. The broad market index added 0.4%

bringing its advance for the year to 14%. The Dow Jones industrial average rose 0.6% or around 240 points, and the tech-heavy Nasdaq Composite eeked out a slight gain. Tomorrow, investors will get another look at the economy when retail sales figures are released. Coming up, the battle for space on grocery shelves is getting even more competitive. That's after the break. TD Insurance, we understand that your business is unique, so your business insurance should be too. Whether you're a shop owner, a pet groomer, a contractor, or a consultant, you can get

customized coverage for your business. Contact a licensed TD Insurance advisor to learn more. As we first mentioned this morning, there's a major deal underway in the snacking world. Mars, the maker of M&Ms and Skittles, is buying Kella Nova, which makes Cheez-Its, Pringles, and Eggo waffles, for nearly $30 billion. Acquiring Kella Nova would give Mars a way into supermarkets' chips and crackers aisles, giving it a bigger share of the snacking market when consumers are eating fewer sit-down meals and more snacks throughout the day.

The battle for shelf space in supermarkets is heating up, and that's making it harder for consumer packaged goods companies and others to stand out. My colleague, Jennifer Williams, is reporting on all of this. Jennifer, welcome. Thanks for joining us.

Thanks for having me. So let's start with the basics. If a food company wants to get its products on the shelves of a grocery store, how does that even happen? Yeah, so long before we see what's on a shelf, there's a lot of negotiating going on. And one of the components of that is a slotting fee, fees that brands are paying to the retailers, to the grocers, to the supercenters for the shelf space and the placement on those shelves. Some brands are influential enough that they can say they don't want

to pay them and grocers and supercenters are okay with that. But for the most part, you're paying for the spot on the shelf as well as the placement on the shelf. And what's the best placement on the shelf. And what's the best placement on a store shelf? Like, what are they all fighting for? They all want to be eye level.

You don't want to be too high. You don't want to be too low because as one CFO told me, you have one or two seconds to capture the consumer's attention. Why is it getting tougher to get products on store shelves now? So there are a couple of things going on. One is that brands for the last couple of years have been able to raise their prices to, as they have said, cover the inflation that they've been dealing with. Consumers want to spend less on their groceries,

and retailers, as a result, are being more selective about the products on their shelves. A lot of grocers and super centers are putting more of their own brands on shelf space, which just adds to the fight for real estate. And at the same time, they're cutting down the square footage for aisle space. Some of that I've heard is because they're

turning more of that space into sort of an experiential component. For instance, hot food or places to hang out in the grocery store. And so that just means less real estate for aisles. So brands have their own products on store shelves. There's less room for everyone else. What are food companies doing then to appeal to shoppers and to grocers? They are working really hard to make the case for why their product should be wherever they

think it should be on the shelf. And one component of that is innovating. They want to come up with new products that excite consumers and so will hopefully excite grocers as well. They're also working to convince retailers that their prices make sense. And if they need to raise prices to cover inflation on certain commodities, for instance, they're making the case for why they're doing that to cover their own costs, not just to raise the price tag.

And where does packaging come into all of this? Do companies realize they have to have an even slicker design and a more eye-catching format to try to get someone to put them on a shelf somewhere? Yeah. So, that's another part of what they're investing in. It's the marketing, it's the packaging. They all want, when you walk into an aisle, your eye is drawn to that product and they

want to be able to make the case for the grocer, for the supercenter, that we're going to sell quickly, which is good for the retailer, good for the brand. So bottom line, what determines whether a brand makes the cut or not? There's no one answer. It's going to be brand recognition. It's going to be for the last period where your product's selling through. Do you have new things to offer to consumers? Can you pay the slotting fee? A lot of dynamics go into it. Jennifer, I think we'll all look differently at products on store shelves from here on out.

Thanks so much for being here. Thanks for having me. It's one of the hottest jobs in tech and can pay six figures without the need for a college degree. We're talking about data technicians, the folks that keep the colossal data centers across America humming daily. These are jobs in high demand as tech giants like Microsoft and Google pour billions into these data centers to power everything from AI chatbots to our trillions of photos and emails in the cloud.

According to the certification and training provider, CompTIA, pay for data technicians jumped by 43% in the past three years, climbing to more than $75,000 a year. And with more experience, there's a potential to make a six-figure salary. Our reporter, Topin Chen, spoke to our tech news briefing podcast.

There are absolutely hubs for these sorts of jobs in the US. Northern Virginia would be one that really dominates, but unlike a lot of tech jobs, they are scattered around the country, often in places that maybe aren't that populated, that have access to cheaper electricity, that have a lower cost of living, and so they really can be found in many communities across the U.S. One thing that a lot of the workers I spoke to said is that

these kinds of jobs, look, they can be very hard jobs. You have to be able to work sometimes in windowless rooms for long periods of time. You have to be maybe up and down a ladder a lot of the days, swapping up components. But they do offer not only good pay, but also a lot of good advancement opportunity. I was struck at the number of workers I spoke to who had just been on the job for a couple of years and had already gotten one or maybe even two promotions in that time. And you can hear more about these jobs that defy the traditional blue and white collar job distinctions in tomorrow's WSJ Tech News Briefing podcast. [♪MUSIC PLAYING》

In other news, a federal judge ruled that the University of California, Los Angeles must ensure equal access to campus for Jewish students after some alleged in a lawsuit they were blocked by protesters at this spring's pro-Palestinian encampments. The judge issued a preliminary injunction yesterday requiring that if Jewish students are blocked from certain programs, activities, or parts of campus, UCLA must also stop providing access to all students. The injunction takes effect tomorrow. A UCLA spokeswoman said the district court's ruling would improperly hamstring their ability to respond to events on the ground.

And Defense Secretary Lloyd Austin is facing legal objections and political pushback for his August order revoking a plea deal to close the long-stalled case against accused September 11th mastermind Khalid Sheikh Mohammed and two co-defendants the U.S. has held without trial for more than two decades. A Guantanamo Bay naval-based judge is reviewing Austin's intervention and whether he held the legal power to revoke the plea bargains. In Washington, the Senate's number two Democrat, Dick Durbin of Illinois, asked Austin to reconsider his decision.

And that's what's news for this Wednesday afternoon. Today's show was produced by Pierre Bianamé and Anthony Bansi with supervising producer Michael Kosmides. I'm Chip Cutter for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.