Pressured by inflation, a broken supply chain and the added cost of storing goods once they finally arrive, retailers did the inevitable last year — they raised prices.
A recent Strategic Insights retailer survey conducted for Home Accents Today found nearly nine out of 10 respondents hiked their prices in 2021, citing the aforementioned factors along with a need to pass along cost escalations from their own suppliers. Warehousing was listed by 63% as a key reason for price changes, followed by inflation (59%) and the supply chain (53%).
The survey results, which are considered qualitative rather than quantitative, still provide insight into how retailers are responding to the ever-changing economic and supply situation.
Price hikes covered the gamut, with 31% acknowledging pushing prices up between 6% and 10% in 2021 and 25% opting for a larger 11% to 15% change. At the highest end, about 6% said they went with a price spike of more than 30%, while a similar percentage opted for a much more moderate 1% to 5% raise.
In commenting on their decision to alter their pricing, retailers from home accent, full-line furniture and home and gift stores noted they are reacting to what has become a marketplace norm. “Vendor price increases are directly passed on,” wrote one respondent. “Our mark-up hasn’t changed.”
“The vendors are all raising their prices, making us raise our prices. This is out of hand,” said another retailer, who fears the fallout will be a consumer pivot to discounters.
Among the supply chain woes retailers cited for their price adjustments were ocean freight surcharges, general shipping costs increases and damages.
At the recent Atlanta Market, Uttermost executive Lori Fisher acknowledged raising wholesale prices multiple times this year so far, as have nearly all of its industry peers. Uttermost’s increases varied but were roughly between 2% and 4%, and on an item-by-item basis, according to Fisher, who oversees product development, marketing and advertising for the company.
But container prices have come down 21% over last year and Fisher said Uttermost has no more increases planned for the remainder of the year.
“We’re hoping prices will start to come down,” she said. “Container prices have come down and we’re starting to negotiate with our factories.”
Retailers rethink travel plans
The onset of inflation and the specter of recession have also caused some retailers to reconsider their plans for the remainder of 2022. When asked if they were revising their market-related travel plans, 36% said they were.
“Business has decreased dramatically with fears of a recession, so we are really thinking through what we need to buy,” commented one survey participant.
Heading up the list of factors influencing the decision to review plans was rising travel costs, cited by 85%. Staffing shortages played a role for 39%, while fears related to COVID-19 were lowest among the reasons given at about 15%.
For more than half, however, the need to attend second-half shows is moot because they have adequate inventory to get them through the remainder of the year. A quarter of respondents, in fact, said they were overstocked right now and an additional 67% considered themselves well stocked.
That left about 8% who said they were still struggling to find inventory. Interestingly, the leading category being sought among the undersupplied was wall art.
Some retailers who considered changing their travel schedule rued the lack of new items, sparking comments such as “not enough new, innovative product out there,” from one, and “I’m tired of the same ol’ things at each and every show” from another. —Allison Zisko contributed to this story.
