For several years, consumers around the globe have been complaining concerning the rising prices of on a regular basis items, from gasoline to clothes and even eggs. However, many consumers miss out on how these rising prices are the results of problems which have created a ripple effect in virtually every industry.
Nevertheless, some firms have responded to those challenges with modern solutions which have allowed them to grow despite the worldwide slowdown in the availability chain. To avoid similar problems in 2023, firms might want to take extra precautions to be certain that their products – and their consumers – proceed to thrive.
The crisis facing the industry today
2022 turned out to be a very demanding 12 months for consumers unprecedented rate of inflation causing this significant increase in the costs of consumer goods. But it wasn’t just individual consumers that were affected—firms also began to experience challenges with rising raw material costs and shipping processes.
At the identical time, businesses faced supply chain issues starting from shortages of certain items to delays as a consequence of low staffing levels. This created a full-on supply chain crisis which several industries are still facing, leaving consumers with declining stock levels. Some products even became commodities as needy consumers were forced to pay heavily inflated prices to account for higher demand and lower supply.
Why cutting costs is healthier than raising prices
Unfortunately, in these economic conditions, businesses face an unlucky dilemma. Rising raw material and transportation costs can significantly reduce an organization’s revenue, but rising prices may also come at a value.
“When consumers are more aware of their spending, raising prices can mean losing a part of their customer base,” explains Robert Felder, Founder and CEO Bearbottom’s clothes. “However, the corporate has to weigh this against the lack of profit it will incur from not raising prices. The goal is to seek out a technique to provide the shopper with a product at a competitive price, while allowing the corporate to grow.”
Companies can also find other ways to extend margins, resembling lowering costs, along with raising prices. Felder suggests increasing the efficiency of operations to cut back overhead. “We optimized the scale of our master cartons to make higher use of the physical space available in a 40-foot container,” he explains. “With these changes, we’ve increased our container utilization rates to shut to 97%, leaving almost zero wasted space. The reduction in shipping costs per unit is important.”
Felder also suggests that firms work with their shipping partners to seek out cheaper and more efficient shipping routes. “We’ve seen great success in directing orders to smaller ports closer to the destination,” he says. “While this has added somewhat overtime on water, in some cases we’ve seen cost reductions of as much as 30%. These savings can then be passed on to the shopper.”
Streamlining transportation has the additional benefit of reducing an organization’s carbon footprint, because the transportation process may end up in significant greenhouse gas emissions. These days, firms are more answerable for the negative impact they’ll have on the environment, as consumers are more concerned concerning the sustainability of the products they buy, and environmental friendliness is a think about purchasing decisions. Thus, streamlining the shipping process will not be only a technique to get monetary savings, but additionally to draw customers.
How helping the shopper helps the corporate
Felder desires to remind firms that helping customers is definitely helping yourself. “Ultimately, our goal is to assist our customers in times of always rising prices,” he assures. “If we will keep our prices regular and proceed to supply great value, consumers will proceed to purchase our products. Finding ways to chop costs anywhere – even on a small scale – is critical to maintain customers coming back.”
Many firms have struggled to get better amid unprecedented inflation rates and a supply chain crisis unlike anything we have seen before. Still, raising prices will not be all the time the answer.
“The firms that can give you the option to get out of this case are those that can give you the option to grasp the needs of their customers and adjust their spending accordingly,” says Felder. “Find creative ways to cut back costs and allow them to reflect your prices.”
