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!

[sugarlab]

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! 

[PerroneTech]

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.

[Candlestore]

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.

[AnniPadanni]

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.

[lawnbrook]

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.

[LocavoreStore]

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%.

[CServiceRepair]

  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

[makedonas]

Being in the restaurant business, means being able to adapt on the fly. 
Being flexible, being able to foresee. 
if you’re truly in tune with your business, you will be able to see and sense when things are about to change. 
For example, purveyor pricing changes will happen across the board and if they become consistent, that clues you in that you need start making changes right away. 
If you wait, it will make it even harder to get through hard times. 
I feel like that any time I have time “breath” (periods of slow times), I’m always looking of ways to become more efficient and I’m looking at longterm projects that will help the business. 
Keep checking your data (if you have it). Comparing weekly and monthly sales, year over year. 
You constantly need to have a certain percentage of your focus on the longterm. 

[mksavage]

I appreciated this perspective -- I was just talking to our leadership team about how we will never "finish" working on our systems and numbers. It is an ongoing process to continue improving -- auditing our data, making sure we have the full picture, adapting when necessary, learning to respond quickly and efficiently. I think it can sometimes feel defeating to the team that we have to constantly be "auditing" these things, but the industry is so dynamic that it's the only way to make sure you stay in control.

[homeprogreen]

My costs for shipping are definitely increasing. The State enacted a new 12.5% tax on certain of my products so that’s requiring me to run separate transactions for those items to ensure my customers aren’t paying the tax on the rest of their purchase so that’s increasing my transaction cost. Still have the same number of sales but I am seeing the average ticket trend down as customers are struggling to make sure they stretch every dollar as far as possible 

[Greenmonkey65]

Shipping cost has been one of our main issues, but we add it into the cost of goods and mark it up to our standard margin policies.  All stores see these issues.  And thus far, folks may mention it, but they still buy and even say it is happening everywhere.  June was a great month, but July is a significant slowdown!

You can set up different taxes on different products, and we do it with our prepared food and beverage tax because we serve draft beer in our gift shop and bottle shop. 

Rusty

[doc_choc]

If you manufacturer and retail keep a very close eye on your cost of goods. We make and sell 300 chocolate products, it's time consuming but we are continually monitoring margins in real-time as raw material costs and labour costs continually rise. We have found some products are just becoming non viable even with moderate retail price increases. We have decided to discontinue some lines and focus efforts of the more profitable products. Its challenging times out there but it will get better with time and as a community we are stronger. Engage with the Square community as there are knowledgeable, experienced members always willing to share and help. 

[OldCoder]

It's nearly grounded it. We are a little CBD shop and that product is not on the same par as bread milk and fuel for the family car.

LGB!!

[logisticalstyle]

Now that I am starting to feel the pinch of inflation I am raising my rates.  I may loose some potential customers but I have been operating at the lower end of my competitors prices for quite some time now. I feel like now is a perfect time to increase my rates to what I should have been charging anyway. Any events that require me to leave my metro area are getting an extra $50 just for gas expenses. 

[ReginaRMT]

@Pesso 

I don’t feel it has impacted me as of yet. I for one will not be increasing any prices, if any thing I would rather lower prices and work one more hour a week to cover the gap. So no issues on my end at all. 

[LynnSim]

the only reason it's 9.1% is they now do not include the increase in energy and food, it's really much higher. My energy bills have more than tripled. Being in a recreational service business, I've lost clients due to loss of disposable income. And as a result, I've cut the hours that I'm open, mainly due to payroll vs sales (thank you for forcing the increase in wages before destroying the economy with your go green policies). But hey, as long as the Biden crime family and Nancy Pelosi make millions with investments that they wield control over, who cares how many small businesses they kill.

[GourmetOnWheels]

My Cheese purveyor raised his prices well before this so-called inflation. My meat supplier has not raised the prices as the meat comes from New Zealand and Australia and both countries give enormous incentives for export.

I think it is more greed and price gouging and they are hiding it as inflation.

René

[saydad]

The rise of costs has a detrimental impact on the small business owner . The food industry has an already small profit margin, labor cost continue to rise and its a never ending cycle. I think where the burden becomes even worse, is when you are in rural america, and have a business with a niche, a small farm to table that already provided a higher quality product, we now are seeing the drop in sales. We are having to work with minimal staff to reduce cost, yet still provide the same type of service or quality. Inflation is an overall impact to any small business as it is affecting from every direction. 

[mksavage]

This is exactly the position we're in @saydad. It's been a pretty scary time, with food costs rising exponentially and wanting to pay our team more, but feeling like there is a limit to how much we can/want to charge our customers. We are already positioned as a premium product -- we use high-quality ingredients and make almost everything completely from scratch -- so our customers are accustomed to paying a slightly higher price, but there comes a point where they will choose a cheaper option, even if it's not the same quality. It's pretty concerning, given the already razor thin margins in the industry. As always, we're trying to focus on the "added value" of an exceptional (and irreplaceable) customer experience and consistently looking for ways to be more efficient in all that we do. 

[MudFire_Dex]

We are experiencing supply chain shortages more so than inflation right now with regard to materials. Most suppliers have kept pricing to their normal 3-5% annual increase which is normal in the ceramic industry. But shipping right now is 50% higher due to fuel surcharges.

[LocavoreStore]

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