Customers all over the world have been complaining for the past few years about rising prices for basic goods like gas, clothing, and even eggs. Many customers, however, are unable to understand how these rising costs are a result of problems that have had an impact on almost every industry.
However, some businesses have responded to these difficulties with cutting-edge strategies that have enabled them to continue expanding despite slowdowns in the global supply chain. Businesses will need to take extra precautions to guarantee that their products — and their consumers — remain in demand if they want to prevent similar problems in 2023.
The Crisis The Industry Faces Right Now
2022 proved to be a particularly challenging year for consumers, with an unprecedented rate of inflation causing this substantial increase in the price of consumer goods. But it wasn’t just individual consumers who were affected — businesses also began to experience challenges due to a rise in the cost of raw materials and shipping processes.
At the same time, businesses faced supply chain issues, ranging from shortages of certain items to delays due to low staffing levels. This created a full-on supply chain crisis that several industries are still grappling with, leaving consumers to face dwindling levels of stock. Some products even became commodities, as consumers in need were forced to pay heavily inflated prices to account for higher demand and lower supply.
Why Cutting Costs is Better Than Raising Prices
Unfortunately, amid these economic conditions, businesses face an unfortunate dilemma. The rising cost of raw materials and shipping can cut significantly into the company’s bottom line, but raising prices can also come at a cost.
“With consumers more conscious of their spending, raising prices could mean losing a part of your customer base,” explains Robert Felder, founder and CEO of Bearbottom Clothing. “However, a business must weigh this against the loss of profit they would incur from not raising prices. The goal is to find a way to provide your product at a competitive price for your customer and still allow your business to grow.”
How Helping The Customer Helps The Business
Felder wants to remind businesses that helping their customers is actually helping themselves. “Ultimately, our goal is to help our customers during this time of constantly rising prices,” he asserts. “If we are able to keep our prices stable and continue to offer great value, consumers will continue to buy our products. Looking for ways to cut costs anywhere — even in small ways — is critical to keep customers coming back.”
Many businesses have struggled to recover in the face of unprecedented rates of inflation and a supply chain crisis the likes of which we have never seen before. Even so, raising prices is not always the solution.
“The businesses that will be able to come out of the other side of this situation are those that can understand the needs of their customers and adjust their expenses to reflect that,” says Felder. “Find creative ways to cut costs, and let them reflect in your prices.”
