thread How does inflation impact your business? in Community Corner

How does inflation impact your business?

PessoAlumni — Mon, 16 Dec 2024 14:55:59 GMT

Hello all you wonderful Sellers!

This week's question is especially pressing and we're all very curious to see what you have to say.

Inflation (a decrease in the value & purchasing power of money) has reached 9.1% in the US which is the highest it's been in 40 years, and similar highs around the world.

How does inflation impact your business?

Have you felt it affect your business? If so, what have you done to get your business through it?

Looking forward to hearing your thoughts!

Re: How does inflation impact your business?

TCSlaguna — Wed, 13 Jul 2022 18:52:28 GMT

Most of our vendors have increased product costs due to (1) raw material supply chain issues, and (2) increased shipping costs due to gas prices. We have to maintain our margins to stay in business, so we have to adjust accordingly. Given our item library size (in the thousands), we prefer to do slightly larger increases yearly than having to update prices throughout the year.

I think most customers understand and have heard about inflation on the news, so they are not surprised at this point when they see prices increase. But it's important to let customers, especially regulars, know why prices have increased if they ask.

@DinaLRosenberg Is there shrinkflation in our industry? Less incense per box? Smaller tumbled stones for the same price? I suppose so.

Consumer spending has definitely dropped as people are noticing their money is not going as far as it used to. While Janet Yellen initially said she thinks this inflation is transitory, now she is starting to acknowledge that it may not be. We are definitely watching our expenses and holding off on any discretionary spending such as remodeling.

Re: How does inflation impact your business?

LBm40 — Wed, 13 Jul 2022 21:04:58 GMT

Inflation? What we are experiencing is price gouging. Gordon Foods in particular. Nitrile gloves that were $5 for a box of 100 pre covid. Since covid it’s been $35 for a 250 count box. I found a new supplier that I can get a case of 1000 nitrile gloves for $75. That’s half the price. Canola Fry oil pre covid was $20 for a 35# jug has been $60 for the longest time. Corporate suppliers coke and pepsi included have been seeing profit increase while small businesses are suffering profit losses. Let’s all agree this is not inflation it’s price gouging. I’m **bleep**sed.

Re: How does inflation impact your business?

TheRealChipA — Thu, 14 Jul 2022 03:47:30 GMT

@LBm40 GFS has always been one of the most expensive broadline sellers in the business. A few years back, after I discontinued food and focused on frozen treats only, that became very obvious to me. I was paying for the convenience of other folks being able to buy at their local GFS store. Regardless, once I realized that I could buy from Webstaurantstore online for 20-30% less, including shipping since I have a Plus membership that gives me significant shipping discounts, I decided to only use GFS for emergencies only or even to go without if I could until I could get what I wanted from preferred vendors. But, in general, all of the main hospitality suppliers that deliver to our doorsteps are way more expensive than they should be. Hopefully, Covid and the current economy will cause them to realize they are driving away customers.

That fact doesn’t change the fact that we are in an inflationary cycle. I blame quite a bit of it on the free money that governments threw around during the lockdowns and general pandemic. “Free” money always comes with a big price tag. We will all pay dearly for it, now. Ugh.

Re: How does inflation impact your business?

TheRealChipA — Wed, 13 Jul 2022 22:24:33 GMT

At the beginning of the year, we didn’t notice it. Over the previous winter we had been waiting for deals and product availability and stocking items in to lock our costs down once we opened for the season. However, because of much better than expected sales this year (I know…. Such a problem to have! LOL), we ran through that inventory pretty quickly and then we started noticing inflation.

At first, we tried to hold the line and hope that this, too, would pass. Ha. My gauge that something is wrong is when I don’t have money to put aside weekly to pay our off season bills. When that happened, I had to raise prices. We’ve done that now twice, in smaller increments rather than one bigger price increase. Since my check average (ice cream, after all) is $8-9, those percentage increases weren’t as noticeable as they are on a $40 sit down dinner or $100 retail item or service. So far, no one has squawked, which I’m eternally grateful for. I know how lucky I am in this regard.

Last year, we had three manufacturers of our main soft serve product, which is a lactose-free item that we can’t source widely. One was $65 per case, and Webstaurantstore had two alternatives that were $10-15 less per case, with minimal shipping. This year our per-case costs have gone up $20 across the board, and webstaurantstore’s shipping has dramatically increased. That’s where we are hurting, and I’m looking at year another menu increase in a month if things don’t change.

Ultimately, I might find that this is a year that I decide to draw less on Piper’s so that I can split the increased costs with my customers. But I hope I won’t, and as long as I can continue to do incremental, barely noticeable price increases I hope we will get through this. Thankfully, in my line of work, margins are decent and my employees are teen agers who do this as a summer job and love how much people are tipping, so they don’t complain.

Re: How does inflation impact your business?

DinaLRosenberg — Thu, 14 Jul 2022 03:38:05 GMT

I haven't noticed shrink-flation. We are very lucky to be able to buy and hold in bulk wherever possible in order to get whatever savings are out there. I've noticed candles have gone up across the board. We got super lucky that we had just put in an order before gas got crazy which really drives the price up... we've really been riding the wave so far ... so good.

the prices of crystals has been high for some time due to demand more than inflation.... so many people want to get into this because they see live sellers online making a lot of $$$- Crystals are still our #1 category even though we sell so much more. Again, we're able to out buy in quantity must of our surrounding competitors although we really don't count the locals our competition. We're trying to be a national player.

Re: How does inflation impact your business?

TheRealChipA — Thu, 14 Jul 2022 04:08:57 GMT

I’m home now, relaxing with time to think. I’ll add one more thought to my post above. I mentioned in another post that a big part of this problem is all of the “free” money the governments of the world threw at Covid relief - personally and to businesses. My business is one that took that money, because it was there, and I used it to change my business model to something that would be more pandemic-proof in the future. This was a good thing for me and for my business. But I suspected, and subsequent evidence proves, that there was a cost to this “free” money. It has been a SIGNIFICANT driver of inflation worldwide, because it drove up demand when supply was becoming tighter and tighter.

The point? By taking that “free” money, my business contributed to inflation. We were somewhat complicit in the situation in which we find ourselves. I remind myself of this every day when I want to b(*&ch about where we are. Yes, the money was needed and welcome. But, nothing in this world is free, and sometimes we have to pay the Piper (no pun intended) when the bill comes due.

Not everyone will agree with me, but that attitude does help me weather the current storm — I can’t blame this on everyone EXCEPT myself.

Re: How does inflation impact your business?

ProsperityPools — Thu, 14 Jul 2022 06:19:50 GMT

1) The prices of the chemicals to treat our customers' pools have gone up exponentially.

2) Gas costs have increased our expenses dramatically.

3) We still have a lot of new business, however, we now have a handful of customers unable to afford our services, due to having to budget significantly on household costs. We have been able to pick up new customers to replace them, so far, all organically and without spending any money on advertising.

4) The amount we charge (monthly) has not increased a lot, however, if we raise prices, we may lose some customers. A few have already told us they can't go higher, especially the people on a fixed income.

5) The amount we spend on our household (family, personal) has increased, so we must be crafty and increase sales in other non-related industries (i.e. - freelance writing, reselling, etc.) in addition to our pool company, of which we have approximately 80 customers.

6) All told, our business is doing about 25% better than last year (growth-wise), but if you factor the inflation, we are probably about the same, if not less, due to increased expenses from the inflation.

Re: How does inflation impact your business?

QuokkaCoffee — Thu, 14 Jul 2022 10:08:08 GMT

The main way we've tried to deal with it is by changing our bar and kitchen recipes to account for all of the price increases without having to pass costs onto our guests, for example:

we started off last year with a hefty 22.5g dose per double espresso and now it's 21g
the chocolate going into mochas went from 25g to 20g for a 12oz
we've downgraded our extra creamy gold top milk to standard blue tops and really drilled into the team that there should be very little to no wastage per coffee made
we have three different, very accessible scales so no one has an excuse to 'eyeball' things

Taste-wise the changes are subtle enough to feel like we're not cheating people. The biggest challenge has been getting hit with price increases without warning. Certain suppliers are big enough to telegraph ahead of time; most haven't.

We also work really, really hard to keep our customer service and product quality consistent--with less discretionary spending available we'd like to think people choose to continue patronizing us because it's become less about the food and drinks and more about saying hello to the staff over their lunch breaks or on the way into work. 🙂

Re: How does inflation impact your business?

LBm40 — Thu, 14 Jul 2022 10:51:54 GMT

Why is it we were essential to keep America open yet we have had our prices double, triple and quadruple on items that are essential for us to continue business. Fry oil, gloves, foil wraps, Fry bags, take out bags and more. That’s if they are in stock.
I run a burger and Fry stand drive through and take out only. What we are experiencing is greed. Tyson foods saw a 140% increase in profits and gave their CEO a 20% pay increase putting him at $14 million a year salary.
Beef up 20% pork and chicken up 15%.
We have been run through the ringer since 2020 at what point will we say enough and quit calling it inflation. They have not had cost increases high enough to justify what we have been being charged.
is this how essential businesses are suppose to be treated? We risked getting sick so we could keep the economy going. We had no guidance from health departments on how to better protect our team. We watched people cry when they found out they were essential and had to work because they were high risk. We wore masks. We followed the rules and we still suited up, showed up and smiled hoping to be a bright spot in people’s day. And this is how America has thanked us, by taking from little places like ours that just want enough to live a modest life,

so they can have more than enough.

Re: How does inflation impact your business?

lenjobakes — Thu, 14 Jul 2022 17:47:27 GMT

I hear you, @LBm40. It's really hard not to feel like we've been done over. Operating a food business and not knowing whether or not your supplies are going to be in stock are just one of the most frustrating parts.

If suppliers were seeing similar costs to small business, it'd be one thing. But you're right - they are making record profits and we're (at least I) am just trying to hold on for 2024 to see if it gets a little better😅

Hoping that a turnaround point comes for you soon and while it may not be a source of comfort, know that you're not alone and you have a whole community of people who are sharing your frustrations!

Re: How does inflation impact your business?

lenjobakes — Thu, 14 Jul 2022 17:51:50 GMT

@QuokkaCoffee Shrinkflation has been our modus operandi as well over the last few months. (Particularly after butter jumped 30% just before Christmas.) It feels like we have no choice!

Our customers deserve the best, but they couldn't (...maybe wouldn't?) embrace the full 30-45% cost increase that we're seeing. It's a tough balance for sure.

Re: How does inflation impact your business?

lenjobakes — Thu, 14 Jul 2022 17:58:18 GMT

As a business that started up only a month before the pandemic, I honestly don't know what I've been experiencing.

I feel like I'm constantly in this mode of waiting for the other shoe to drop.

How does it impact my business? All I've done is pivot pivot pivot for the entire time that we've been operational - effectively spinning in circles.

Since flexibility is all we've known, it's what we rely on now. How do we maintain the premium ingredients we need to create the premium product our customers expect? Shrinkflation. Our squares are the same size, but they are marginally (10%) smaller and we increased the price (5%). We actually raised all of our prices 5%, but this was back in January before we knew that cold cup packaging had gone up 70% and that the price of dairy was going to increase for a 3rd time in 9 months.

Will we raise prices again? Probably. Maybe closer to Christmas when our volume is up - it helps to recoup costs.

But ultimately we're putting our heads down, grinding and pivoting our way to 2024 when we hope the worst of what's coming is over.

Re: How does inflation impact your business?

sugarlab — Thu, 14 Jul 2022 19:00:33 GMT

We just raised our prices about 5-10% depending on the item. No one has really notice, or if they have, they hadn't said anything. We haven't raised those prices since 2020 so I think that helps. Working on creating more efficiencies in the kitchen and utilizing my staff in different ways so everyone is doing something productive. That's always been a focus but it's been lazer focused this year especially. I want to continue paying my staff well and be able to offer my customers a quality product and quality customer service. I think happy employees helps create both of those!

Re: How does inflation impact your business?

PerroneTech — Thu, 14 Jul 2022 19:14:03 GMT

I'm going to be completely honest with you, I don't know how it affects my business. I repair and refurbish computers. My cost is always passed on to the customer and my pricing is dynamic. The computer parts industry is very volatile anyway, but my costs are allocated in the cost to the customer, so there isn't any decreased margins for me. The "chip shortage" had affected my company making GPUs and other components a bit more expensive, but the market is a lot more relaxed as a whole now, so I can feel a little less stress when I quote a customer.

I don't use up many supplies such as cleaning, etc. I'm a low-volume, low-contact store. I have wipes, paper towels, and such I got pre-COVID and still have plenty left.

So not much impact here at all. However, I can imagine that many food service industries are feeling it.

Re: How does inflation impact your business?

Candlestore — Thu, 14 Jul 2022 20:10:04 GMT

We are down about 20% in sales both in store and online since more people are not spending their money on "luxury" items but would rather be able to eat and travel since those price went through the roof. Our shipping of stuff we buy and sell has hit the bottom line which gets passed on to customers and now we just had to raise our prices. Our customers that are regulars see the increase and just say well everything has gone up and we were wondering when your prices would go up. They also mention they had to stop buying as many candles because of the food and gas prices, their income is not going as far.

Re: How does inflation impact your business?

AnniPadanni — Thu, 14 Jul 2022 22:54:22 GMT

I was just having this conversation earlier today. Like the person above who said she doesn't really know what's "normal", having opened during the pandemic, I don't either! We opened in November of 2020. My numbers are up 16.6% over last year. We all know that November and December skew things but that said, June was my biggest month ever (outside of Nov/Dec).

I have a brick and mortar artisan retail space. I only own about 50% of my inventory (the rest is here representing different area artisans). My model for my 50% is based on as many consumables as I can. I make a line of cocktail infusions, a full bath and body line for men, women and babies, bougie gift foods (local honey, jams, wine chips, etc) and recently converted an entire area into bulk cleaning, laundry and bath and body product lines. All of it is organic and sustainable, plant based, etc (which is what my clientele want). The bulk option with a "filling station" type set up allows for me to buy it for less and my consumer to control what amount they purchase (staying within whatever budget they need).

It also doesn't hurt that I'm located next door to an established sustainable local grocery store (where all the milk, eggs, meats, produce, etc are brought in by local farmers). Our combined customer base is one that is used to paying premium prices for the fact that they are supporting local, organic, artisan products. We are also located 30 mins east of Nashville (one the fastest growing areas of the country).

How long can it last? I dunno. I have no idea if I'm even doing the right things! I am literally going day by day one sale at a time and so far, keeping the doors open and lights on.

Re: How does inflation impact your business?

lawnbrook — Fri, 15 Jul 2022 01:04:34 GMT

Australia is remote, and Perth, remote within Australia. Freight costs have had the biggest impact on pretty much everything, even before the fuel prices went through the roof.

As far as wine production goes, we've had to review our pricing although as a small producer it's hard for us to raise our retail prices without pricing ourselves out of the market.

For the spirits we just need to be conscious of the increase in input costs and effectively pass these on as best we can

From the restaurant point of view we've tweaked a few think ( @QuokkaCoffee - we chose to raise the price of our beverages as it's not our core business, and we're not in a competitive area). We reworked menu to use cheaper cuts of meat etc and become more creative in our offerings.

I guess the key is, there's no one approach, but the important think is to not be complacent, be across your pricing and make sure you're still in the game when/of normality returns.

Re: How does inflation impact your business?

LocavoreStore — Fri, 15 Jul 2022 03:25:16 GMT

To offset any lag in sales, we extended our store hours to stay open 1 hour later every day. After our first month of the new hours were able to increase sales by 5.7%! We should have done this a long time ago!

Oddly enough, customer spending is up roughly 12% compared to the same time last year (we've raised some prices by a little, but not that much!)... But foot traffic is down ~7%.

Re: How does inflation impact your business?

CServiceRepair — Fri, 15 Jul 2022 11:11:24 GMT

Dear Pesso,

Inflation has a huge impact on not just my business but everyone who is managing their business on any level. I have a small auto repair shop that has huge subscriptions to accurately repair vehicle at a dealership level and I have high expectations for myself and how I conduct business. However, the increase in auto parts does not make it easy for customers who need repairs. I find the inflation to be disturbing and not productive.

Sincerely,

William D