Q: I read the business news every morning and there is a constant discussion about inflation. Is it long-term and a danger to our business, or not? I clearly see prices going up around me, in both my consumer life and my business life. What should I make of it?
Steve Pruitt: This is a unique time. We are in a situation with demand rising while product is in short supply. So, to answer your question, look for any opportunity to raise prices. The next six to nine months is a good time to rebuild your balance sheet. (Most merchants ate through their cash reserves during the lockdowns.)
But, if you primarily carry a widely distributed brand, you have to be careful. You still need to be competitive.
There has been little price inflation over the last 15 years, and this current round of inflation is going to drive up your costs, from utility bills all the way to your wrapping paper. The good news is that the consumer is willing to pay more now, particularly at the higher end of your product ranges. Look at this time as an opportunity to increase your initial markup (IMU)!
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