Jim Cramer takes a closer look at retail as consumers start pushing back on high prices

The big retailers haven’t reported yet, but the smaller ones have already taught us an important lesson. If you’re trying to get away with maintaining high prices here, you got to lose customers. Very few operators are ever willing to admit their prices are just too darn high. If you acknowledge it without doing anything about it, you’re setting yourself up for disappointing numbers going forward. Bye, bye, bye. No, it’s not easy to figure out who can get away with keeping prices higher. Chipotle pulled it off because customers think it’s worth it, something you hardly ever see. We heard Brinker, the parent of Chili’s, tell us about the success they’ve had with what they call barbell strategy, offering lower price items for more value conscious consumers and premiums for more affluent customers. Kudos to CEO Kevin Hoffman for not making an either or proposition that was a good idea. His stock keeps going higher. Now young stock got hit because it wasn’t, but it wasn’t because of Taco Bell. They offered some outrageously cheap food, The Cravings value Meal with 10 items under 3 bucks, that looks like it did great. Some of the other divisions not as good. But McDonald’s failed the test because in my opinion, the burgers now cost too much. They just got up in price so much in 2019, so they don’t come off as a bargain. Something at the Home Office has to know. But the franchisees seem reluctant to admit. I know Starbucks disappointed. Their coffee might be too expensive, which is saying something because it was always pretty expensive, but nobody seems willing to own that idea. There’s disappointment all around, including from former CEO Howard Schultz. Not on the board, though. I’m not hearing anyone talk about rolling back prices at Starbucks. They just seem to want to add more menu items, which I think would actually lead to worse throughput, another unacknowledged problem among many. Owning this one for the Chapel Trust has been nothing short of a brutal experience. What else? OK, this morning Tyson Food said it’s prepared food business, which has seen 20% cumulative inflation over the last three years, has now become too pricey for many Americans, causing the company struggle with the Journeys. That’s why that one was hit. So what does all of this tell us as we head into retail earnings season? I think the take away is that Americans want what Walmart and Costco give them a very low price that rolls back their own house brands to levels that feel like bargains again. Walmart’s created a new version of its own brands that offers less expensive prices. Costco has always been a bargain. I think both will do well. Now I’m not sure how the market will react to Target, Macy’s or Nordstrom. Target is those terrific house brands. They billions of dollars they sell, but they and they do offer real value. But I don’t know if that’s enough given how much the stock is run. That said, Target yields almost 3%. I bet I’ll be viewed as enough of bargain. The people be drawn to it. Nordstrom flirted with the idea of going private, but I wonder whether it has the cash flow to get a deal done. Macy’s, I find, is the most intriguing. They’ve added two board members at the suggestion of a suitor. Our cast. The question is, does that end a possible $24.00 takeover bid that had been widely talked about? You know, it’s really not clear. But I do know this if it weren’t for the activists muddying the story. I think the company has made a case for affordable luxury with Bloomingdale’s and current CEO Tony Spring, who hails from the blooming sales division. I’m guessing Macy’s will be given some time here to work some magic. Last of the $2.00 stores, they’re very confused. Dollar Tree and Dollar General. These two are known for lower prices, but when people think they’re as cheap as the prices at Walmart or Costco, is the place of Costco’s membership too high for the dollar store shoppers? That’s what I’m thinking. Well, anyway, that’s out to be cheaper if you can afford the upfront payment. Believe me. Hey, you know what? So does Walmart. But the dollar stores are always able to offer something that can match or exceed Walmart when it comes to lower prices on individual items. Hey, here’s a real oddity. williams-sonoma reported excellent numbers and it’s certainly not the cheapest in its category. That’s Wayfair. But like Chipotle, Williams Somers regarded as a high quality brand. And that’s what people want in the end. I think retail still the ugly duckling versus travel. Leisure. People don’t want to spend money on physical items unless they have to. But even then, they’re going to be more frugal, even if it means getting a lower quality hamburger or a latte. I like to say there’s always more market somewhere. I promised I find just for you right here. Made money. I’m Jim Cramer. See you tomorrow. Last Fall starts now. Don’t miss a second of Mad Money. Follow at Jim Cramer on X. Have a question? Tweet Kramer Hashtag Mad Mentions Send Jim an e-mail to [email protected] or give us a call at one 807 Four Three. CNBC. Miss something? Head to madmoney.cnbc.com.