Big Retailers Cutting Prices

Episode Transcript

(00:00):
Let's welcome Aaron Rayale NBC Radio backto the program, National Correspondent covering a
couple of pocketbook issues here, Aaron, which I think always gets our attention
with the age of inflation upon us. For one thing, you got some
major retailers cutting prices. This seemslike good news. What's the story here?
Yeah, so this is exciting,really exciting. Target, Walmart,

(00:23):
Amazon, the big boys are allcutting prices. And when I say exciting,
take that with a gigantic grain ofsalt. The fact of the matter
is we have seen costs go uptwenty to thirty percent over the past three
years. So you know, apullback if you haven't gotten a thirty percent
raise, which by the way,would make you living, would enable you

(00:44):
to live the same exact lifestyle youwere three years ago. Yes, it's
short of that which no one hasgotten. You're really struggling. Most consumers
are. We actually saw if youlook at a Target this month, they
posted their fourth consecutive quarterly decline andcompare sales. Shoppers are focused on bargains.
They have been for a long time, but it's at a point where
it's like, Okay, there isno more bargain hunting. There is no

(01:07):
more stretching the budget, there isno more credit card. It's done.
We've maxed the credit card as thebudget is over and we can't shop here
anymore. The companies see this,it's great. They say they're doing it
to give customers some relief. Andwhile I don't doubt that the idea that
there's some benevolent institution that's here forus, No, they're here to provide
a service, they do it well, and they're also mostly here to make

(01:30):
money for themselves and their shareholders.So what they're doing is they're trying to
make up foreign volume what they'll losein sticker price, which is why they're
making these markdowns across the board.Well, for years and years and years,
Walmart's famous TV ads had had theyou know, the picture of the
price, the price cards and thenthey're flipping the lower prices. So that's

(01:52):
kind of always been their selling point. But you're saying, now these companies
are making across the board decisions tocut prices, right, Yes, and
they're all in competition with each other. We know that, we know that
this is this is what they do. They're all fighting for our dollars,
so when they see one go down, the other have to go down.
That you know, there might berecord profits, but if they see so

(02:15):
many people pulling back or moving toeven further bargain hunt, they're actually seeing
their like higher end customer, particularlyat Walmart, begin to bargain hunt there.
That's when you know there's problems ofbrewing. There just aren't enough dollars
to sustain the lifestyle that is requiredfor just living your life. I'm talking
about paying the rent, paying yourcar, insurance, buying food. That's

(02:35):
it. You're not making it rainhere, You're doing what needs to be
done. You know what else isstrange about this? Remember the story Aaron,
I don't know, a couple threemonths ago, maybe where some of
the dollar stores were closing a lotof their locations. They would seem they
would seem to be a natural forthis environment, would they not, You

(02:55):
would think, because they're going topick up a lot of the spillover from
people who didn't shot there in thepast, but now are are moved into
that market because of necessity. Theoretically, you would think that, but they're
having their own problems as well.And dollar store it's oftentimes a misnomer in
terms of it actually being a dollar. But we know that these grocery store

(03:16):
items like listen, it's coming down. But let me give you an example,
like baked beans at Walmart. Notpicking on Walmart, but a twenty
eight ounce can of Bush's baked beansis marked down to two dollars twenty two
cents from two dollars forty eight cents. You're like, okay, thanks,
and well, yes, I getthat this adds up, and the big

(03:36):
bill at the end is lower thanit would be, and lower is better.
But it's not like we're seeing thirtypercent discounts here that would put us
back at baseline. Right on theother end of the spectrum therese GLP one
drugs ozampiic in particular, are justout of sight price wise. Why so
expensive? I assume supply and demandis a big part of it. You

(03:57):
would think that not as much asit needs to be, particularly here in
the US you have Danish pharma giantNova Nordics. There was research that recently
came out. It came from YaleUniversity and King's College Hospital in London.
It costs about eighty nine cents tofour dollars seventy four cents to manufacture.
Amongst the ply of ozembic. Itcosts US here in the US about a

(04:19):
thousand bucks to buy a month applyof ozembic. It is a twenty thousand
percent markup. Talk about drug dealertype margins. Incredible, and the White
Night here this is his wheelhouse.He does this best. US Senator Bernie
Sanders going after that, he's reallycalling out Nova Nordics. He's saying this

(04:40):
is not acceptable. This is adeveloped country and Nova Nordics they're rebuttal and
they're not wrong. They're saying it'sso expensive here because of our byzantine broken
US healthcare system. They say thatafter it provides the rebates to the patients,
it pays the fees to the middlemansthat deals with the complex US healthcare
system. Yeah, you're looking atthat. They're not walking away broke.
They're taking about sixty percent of theprofit, but it's not you know,

(05:03):
the margin gets smaller after that.So I think that this goes to a
more concerning place because the Sanders hasalso cited research from Vanderbilt that says these
drugs could potentially bankrupt Medicare and Medicaidit's going to cost about one hundred and
fifty billion a year for Medicare tocover with GOV and other weight loss drugs.

(05:25):
This is yet another example. AndI love America. I know we
have the best doctors. I thinkthere's I'm not whining here. What I'm
saying is we have a broken healthcaresystem. Categorically, there is no need
to have these middlemen. There's there'sreally, frankly, no need. Like
the idea that we must include allinsurance companies at all times. Everything about
it is goofy, it's antiquated,it doesn't work, and it ends up

(05:46):
costing us way too much money.Yeah, well, well the Medicare system
is going to go broke anyway,so one of that and this won't help
it. Well, one of thethings that doesn't get reported is that,
much like student loans visa or shouldsay tuition fees visa v student loans,
when the federal government got involved inhealthcare, that's when prices started to rise

(06:09):
because it's money that people don't haveto compete for. And that's the situation,
and it didn't happen overnight. Butthe reason our healthcare costs are so
much dramatically higher now than they werea generation ago. Is because we are
now fully integrated into Medicare and Medicaidand the government will pay this not competitively.
The marketplace does not compete for medicaldollars. And it's the same thing

(06:32):
with tuition and costs of major universitiesbecause of federally guaranteed student loans. And
any banker will tell you that's whyit's so expensive, because of the availability
of money. And it's the sameissue in Nebraska right now is looking at
a program where the state can chargea fee of health care facilities in Nebraska.
It could be worth up to halfa billion dollars a year, and

(06:55):
those health care facilities will turn aroundand charge Medicaid for that money to be
reimburse Now, as long as youdon't you're not wrong. But if you
look at other countries, like forWestern countries where they provide healthcare, the
costs aren't the same. For Wagobi, it's the fact that ours is not
only not only broken, like everythingyou said is spot on, but we've

(07:16):
done it in a way that's soconvoluted that it's even more expensive for the
state than it is in other developednations that provide healthcare to every citizen as
a right. Yes, all truetrue. What a mess, Aaron.
Thanks, Aaron Rayale, NBC Radiothis morning.