Inflation Surge - Simon-Kucher Urges Companies to Remember Their Pricing ‘Muscle Memory’

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The global pricing specialist issues warning as inflation pressure builds.

The global pricing and strategy consultancy Simon-Kucher & Partners issued an urgent warning for companies to rediscover their pricing muscle memory in the face of rising inflationary pressures that are putting significant pressure on margins.

Having taken low inflation for granted, financial markets have woken up to the idea that there could be a period of faster price increases coming and the majority of companies are unprepared for the commercial implications.

“Inflation is back on the rise”, said CEO Mark Billige, “however it seems that many companies have lost their ‘muscle memory’ when it comes to price management. Given typically low inflation levels over recent years, this has slipped from the commercial priority list. Companies need to urgently review their price increase process or risk significant margin erosion.”

Simon-Kucher’s Global Pricing Study 2021* revealed a lack of ambition and prioritisation when it comes to price. Almost 60 percent of companies reported improving profits in 2020. However, key profit drivers identified were volume gains and cost savings, both easily reversed by inflation rises.

Only 20 percent of companies identified pricing as a key priority for 2021. Additionally, whilst a majority (82 percent) plan to increase prices this year, companies report achieving on average only one third of the price increase they were seeking. Even with inflation-level price increases, this puts many companies in the danger zone.

“It’s time for companies to act ambitiously and decisively; make a plan and go for it”, concluded Billige.

 

*About the Global Pricing Study 2021: The Global Pricing Study evaluates the pricing and growth strategies of companies across all industries worldwide. This 7th edition included approximately 2,200 respondents covering over 27 countries and 36 industries, who took part in an online survey in March 2021. The sample includes respondents across top and middle management positions in a range of B2B and B2C companies. Further information: https://www.simon-kucher.com/en/simon-kucher-global-pricing-study

Simon-Kucher & Partners, strategy & marketing consultants: Simon-Kucher & Partners is a global consulting firm with more than 1,400 professionals in 41 offices worldwide focusing on TopLine Power®. Founded in 1985, the company has over 35 years of experience providing strategy and marketing consulting and is regarded as the world’s leading pricing advisor.