How does inflation impact your business?

[Pesso]

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!

[Greenmonkey65]

With our retail shop I base everything on margins. When items we purchase increase our prices increase.  We are watching our open to buy budget very closely to keep a very lean inventory. 
We are not purchasing extra supplies. Just trying to be very lean and to create more cash in the bank instead of spending. 

[Twiggy]

I purchase daily in £ on a BV holland auction in € our prices change dramatically.  The winter months are a killer as I purchase most of my flowers from growers / farms based in Holland (minimum wage around €11 per hour) so they need the heating cranked up!  Many stores are selling African or South American roses as its hotter nearer the equator - where the minimum wage is around £50 per week so 5 hours labour EU is equivalent to a week in the fore mentioned countiies.  I try to have the least amount of air freighted or boat freighted flowers in the store which itself is challenging as this is more expensive.

Our minimum order for flowers is now £50 it was £40 a year ago and £25 in 1997   I can make £50 look £60 but a £40 can loook £30 and you often get complaints from the smallest spender- they often want a £40 to look like the £150 bouquet.

We now have a service fee for delivery to pay the extra for fuel on our online store

We were £72 for a dozen roses in 1997 for the "Dior Grade" 90cm and heads the size of you fist.  We are still £72 per dozen but the roses are now 50cm and about the size of your first finger coiled with your thumb. If we get the 90cm "Dior" ones they need to be around £200+ for a dozen - which is out of most peoples reach.  

I'm from an era when mortgage rates were 14% circa 1992 when I set up my business - 2008 is probably the most similar time to now - after the finacial crash.  In 2008 I closed the retail presence, went appointment only - so held no stock and looked at every aspect of the business financially - from paper, wrapping and all the product non floral -Mobile phone contracts - internet charges - Parking permits- Internet and accountant charges etc.   I started to offer "experiences/ training/ workshops at clients houses and travelled to clients.  

2022 -  I have just signed a new lease agreement with a 5% increase / break clauses and again become appointment only. Though the doors are open if we have work going on. I will not be stocking indoor plants this Autumn / Winter as they need heat.. I'm riding the storm with inflation so high - I do not want a repeat of interest rates of 14% - which is the way to balance out inflation. 

The difficult thing about inflation is - If you started your business next week the costs are the costs they are going to be - If you've been trading as long as I have - you reflect back at what they were - which can be a bit depressing. 

Dunno if I'e gone off topic here _  I would say don't get despondent - look at what you have got and how you can retain it and it's OK to raise your prices - you don't have to justify them.

Someone said to me years ago:

When someone you don't know says you're expensive - Ignore it - It's expensive to keep a horse or a yacht. When your regular clients say you are expensive you might need to address your pricing. 

Oh and self raising flour in a dutch baby will get amazing results.

[AsheSkyler]

Shipping prices are the biggest factor. If the post office raises their rates, I raise mine to match. Otherwise, I'm working at the same hourly rate I always have.

[perkits]

Watch your suppliers pricing as it can change daily. It's very hard for us as retailers to keep up with this

accordingly. Traffic seems to be slower for this time of year (gas prices possibly) 

[doc_choc]

We weighed up the impact of material costs, energy costs and employment costs against the impact cost of living costs and decided we had to raise our retail prices. We looked at which product lines had a reasonable margin where we felt we could absorb the cost increases and kept these prices the same. Other lines we more costs sensitive and we took the decision to raise prices to enable the business to maintain a reasonable retail margin. Fortunately on these lines we offered 3 for discounts using the Square POS. So we raised the individual unit prices but kept the 3 for offer the same. This meant that our existing customers took advantage more of the offer as it enabled them to still purchased three units which worked out at the old unit price, while new customers to our brand wanting to try for the first time we're happy to pay a little more for a single unit and then hopefully come back and benefit from the three for offer. For us it really has worked, the only thing is we would really love to see the POS discounts integrating with the Square online platform with inventory management at the item level. We currently have to set up a new item on Square online with a discount, but we can not manage the inventory automatically which becomes painful during the busy times with 300 hand made products to manage. So in summary for our business raising the single item unit price but offering a multibuy discount bringing the price back to the preprice increase has really helped. 

[1klivreri1]

YES! My business is something people would treat themselves to. People stop spoiling themselves when prices go up like this...

[Wmichael1987]

Here in Southern Ms inflation hasn't necessarily "hurt" my company but it most definitely hasn't done me any favors either. The price of my inventory has gone up, shipping has gone up and gotten slower on receiving product, and gas prices have managed to max out fuel budget weekly. I'm hopeful that their is a light at the end of the tunnel and we will get back to normal prices and turnaround time on shipping. Gas prices however I think we are stuck with.