Inflationary Pressures - Retailers' Response

[TCSlaguna]

Hey Everyone! 

U.S. inflation recently hit a three-year high of 4.2% year-over-year. Perhaps it is temporary, perhaps it will stick around for some time. 

My local coffee shop raised the price of their 20 oz black ice tea from $4.90 to $5.30. So now I order a 16 oz. 

Are you seeing inflationary pressures in your line of business?

If so, how do you account for it?

How do you respond when a customer mentions the price increases? 

[ascoach]

The inflation we have experienced over the past year has been challenging for many small businesses.

At the beginning of the year, I implemented price increases on some of our products, and a few customers have questioned the changes. When that happens, I explain that our production costs have risen significantly and continue to increase.

As a custom apparel business, I have watched wholesale garment prices steadily climb, with many items increasing by $0.08 to $0.10 at a time, sometimes on a near-weekly basis. The supplies we use for production have also seen regular price increases, and as a business located in a small rural community, virtually everything we purchase must be shipped in. Shipping costs alone have become a major expense, and it often feels as though some vendors have added substantial surcharges on top of already elevated freight rates.

The frustrating part is that customers often notice and comment on a price increase from a small business, yet they rarely question the higher prices they encounter at large retailers such as Walmart or Amazon. Small businesses are facing the same inflationary pressures as everyone else, but we have far fewer resources to absorb those rising costs. Price adjustments are not about increasing profits—they are often necessary just to maintain the same level of service and quality our customers expect.

[MayuSilkArt]

My business has the word Silk in its’ name. The price of silk went up 50% last year. 

Although our paint-your-own-silk-scarf experience is very popular, and we haven’t raised our prices in spite of the growing costs, folks are feeling the squeeze and when it coming down to discretionary spending vs food on the table, folks will always go for the necessities first. Even our corporate clients (who hire us for team building/client appreciation events) have been migrating away from art-centered activities to food-centric experiences. Raising prices WILL result in fewer sales. We feel stuck between a rock and a hard place.

[MudFire_Dex]

Yes - we've had the studio in operation since 2013 - we charged $149 a month for membership then - and increased to $155 post pandemic attempting to recover losses and increased our membership capacity by 50 more members. Then this spring when the tariff pricing, materials shortages, and increases in shipping started hitting us dramatically we decided new members would pay $170 but our current members would only increase to $163 (for a month...) and yes - we did get questions/marginally rude emails from a few member. Other studios charge $275 and up, so it doesn't result in fewer customers - we still have a waitlist. 

We strongly believe art making should be accessible and we have 6 month hardship spots that are free and/or pay what you can - we reserve 10% of our membership for those spots. 

I agree - price adjustments aren't about profit for most small businesses - they are about keeping the same profit you had before - rarely increasing profit. People get mad at big box stores but take out frustration on smaller businesses that are targets because of our empathy and customer relationships.

But on the plus side - some customers get it. We got a Doordash certificate for the team in the amount of $300 today because a customer was having a hard day at work. They were grateful to be here and wanted to say thank you to all of us.