With spiraling costs weighing on Main Street more mom-and-pop shops are having to make the hard decision to pass along their rising costs to customers while they worry that customers might defect to larger retail chains with lower prices.
Sarah Piepenburg is the owner of Vinaigrette in Minneapolis. She expressed relief that her sales fell by 15% during the pandemic lockdowns. However, she said that her expenses have risen by almost 50 percentage.
Piepenburg waited as long as possible, but she stated that she plans to increase prices in the next two weeks because of rising shipping costs and glass bottle cost increases.
” We are desperate to retain our customers because we know that we are a top product.” she stated. We have a loyal customer base. “We have a very loyal customer base. A trade group for small businesses, the National Federation of Independent Business found that rising costs continue to pinch business owners. This is in addition to sharply increasing labor costs.
The NFIB Small Business Optimism Index was down in the last month due to more negative sentiments. Nineteen percent of 10 small business owners surveyed stated that supply chain issues had affected their businesses.
” They have to deal with higher input costs in terms of inventory and supplies, as well as having to balance increased compensation,” stated Holly Wade, the executive director of the research center.
The survey showed that only 6 percent of respondents expected better economic conditions in the next six months. 57 percent said they had raised their selling prices. This is compared to just 6% who reported lower prices. Half of respondents said they planned to increase prices.
” One of the biggest stresses for owners is to balance price increases and maintaining a competitive edge. Wade stated that it is a delicate balance act.
” They won’t see these problems ease anytime soon,” she stated. “These adjustments will continue until they see these headwinds ease A key indicator of inflation at wholesale level, Tuesday’s Labor Department’s October Producer Price Index rose by 8.6% from a year earlier — a stunning rate of growth that matches September’s year-over-year record. Producer prices increased by 0.6 percent on a monthly basis due to rising gasoline prices. Even after volatile energy and food prices have been removed, core inflation rose by 0.5 percent in the month.
“Many global factors that have had an impact on all aspects of business logistics are starting to catch up to us this holiday season,” stated Sarah Crozier, communications director at the Main Street Alliance small-business advocacy group. She is pushing for Congress to pass President Joe Biden’s legislative agenda which includes investments in supply chains strengthening.
Crozier stated that logistics and transportation issues are making it more difficult and expensive for businesses to obtain supplies and components, especially for import-dependent industries. She said that it was concerning for small businesses if these trends continued.
Christopher Slowinski is the founder of Christopher Designs in New York City. He said that the industry has been on a difficult road.
Slowinski stated that he has struggled to get goods such as diamonds in the company’s unique style for manufacturing equipment.
Slowinski sells his products to jewelry shops. He said that even though sticker prices have risen by about 5 percent, retailers tell him that the demand is strong. “The consumer market remains strong. He said that they are looking to buy.
” The problem is that even if we are looking for tools or supplies to produce, it’s still the same thing. He said that what we paid six months back is now more.
Sometimes, items are not available at all prices. Slowinski attempted to purchase a new piece of equipment when a piece broke. However, he was unable to get a replacement because it was back ordered and had no delivery date. He said, “So I’m trying to fix it myself.” “It’s happening to everything you need for the business.”
Wade, of the National Federation of Independent Business, said an inability to get equipment, supplies or labor is one factor causing small businesses to lose sales. She said that all of these problems are hindering their ability to reach those sales opportunities.
Small businesses can lose sales due to inability to obtain equipment, supplies, or labor. A community banker stated that he hears concerns from everyone — business owners, consumers, and investors about the effect of inflation on their nest eggs.
” The economy was not designed to handle the shifts in demand we are seeing today. “There’s this tension between resilience, efficiency,” stated John Cunnison (chief investment officer at Baker Boyer Bank in Walla Walla). “For small businesses, they’re just having a hard time sourcing supply.”
Cunnison said small businesses in his community are struggling to procure supplies as well as labor. He said, “A snarl within a supply chain is liable to produce another snarl.” You have to pay for fuel if you are able to get a truck and trucker. It’s just one thing on top Customers are now having to pay for ever-increasing fuel costs. He said that although it varies from business to business, some of the costs will be passed on.
While his Baby Boomer clients are still afflicted by the 1970s-style deflation and fear that high prices will reduce their portfolios’ value, Cunnison suggests that such worries may be misplaced. He said that it does feel like there is a slight difference in this situation with the pandemic.
“Something about this could be a pandemic that fades,” said he, adding that the supply-demand imbalance at its heart of the inflationary run could exhaust itself before it causes lasting economic damage.
” With our wealth management clients… we’re making steps to hedge against that, but there are all kinds of reasons to believe this is not the 1970s,” said he.