What Can I Do to Succeed as a Business During Inflation?
We are nearly halfway through 2022 already!!!! This year has moved by so quickly.
I am sure by now, you have felt the impact of the economic climate befalling our country. Gasoline, Food, Rent, and Electricity costs continue to rise. Prices for daily staple items and services continue to increase, and the available expendable income of our mutual customers continues to shrink.
Comparing today’s market to those months during COVID when we were all one of very few “Essential Businesses” is no longer a reasonable comparison. As the country gets back to normal, economic pressures will trickle down to Americans all over the country. The buying habits of our customers will begin to adjust over the next 12 to 18 months. All indications show that we are heading towards a recession. While the industry has proven to be quite successful in a period of recession, we have yet to experience a climate of inflation as we are in today. The world is changing, so we must change as a vendor, and you as a buyer.
BEING A GREAT BUYER and RETAILER can even your odds and allow you to thrive in this climate compared to your competitors. Items will increase in price, and you may see an increase in operational costs, but if you focus hard on how you BUY products, you can increase sales & improve margins. Purchasing properly can be your #1 factor in overall success.
Here are a few pointers on what YOU can do to keep your prices low, margins up, and retail business ahead of the curve.
1. If you have multiple locations, centralize your purchasing to get bulk discounts!
2. Where bulk discounts exist, take advantage and take on a little extra inventory where reasonable.
3. Do not be afraid to negotiate certain items with vendors if you find the same product less expensive elsewhere.
4. Do business with vendors who honor their word, have outstanding customer service, and stand by what they sell. Dealing with defective items & broken merchandise while waiting on vendors to take care of you can cost you time and money.
5. Never order below certain thresholds. For example, if Free Freight is available at $1000.00, buy ahead and meet that parameter on EVERY ORDER. (This alone can save as much as 3-8% in your total COGS)
6. Price shop and only do business with vendors that allow and honor price matching! Just because they say it; doesn’t mean they honor it.
8. Communicate with your vendor personally. Make sure you call, email, and text your salesperson to ask for specials, discounted items, and other ways of bringing your cost down. *You never know when a vendor has an overstock situation now that the supply chain has loosened up. *
9. New Products MOVE! Mix up your selections to make them more appealing to those customers who frequent your store. Everyone wants to see new stuff!
10. Honor vendors who Honor you! Take advantage of free swag, selling materials, posters, t-shirts, hats, etc.
11. Last, secret shop your competition! If they sell something for less than you, you aren’t buying it correctly or need to purchase differently. *Buy different things to differentiate yourself!*
I hope that this helps you out, and it gives me a chance to personally thank each of you for making LuvBuds one of the fastest-growing brands in Cannabis year after year.