Supplier prices are constantly increasing. How should you respond to these?
The current economic environment and rising inflation are causing suppliers to increase their pricing to cover higher input costs. These costs are being driven up by factors such as the Covid pandemic, global transport shortages and natural resources being harder to come by.
Retail stores all too often bear the brunt of these price increases, being the last step of the sales chain before goods reach the end-user. To maintain profitability while their costs increase many retailers have chosen to increase their own prices. While this helps retailers maintain profits, it can upset customers if not done in the right way. If retailers choose not to increase their prices, they then face a range of other problems including difficulty maintaining wages, higher staff turnover and decreased profit margins.
There are different ways that a retailer can overcome these challenges and stay profitable while dealing with these increased prices.
Discuss options for stable prices
In order to save you from any unexpected price rises, discuss with your supplier possible options for price stability. You can work out a deal that benefits both you and your supplier, allowing profitability for each of you. This deal can include an extended period of stable prices and an agreed upon period of warning before any price increases. These terms should be kept in your supplier contract to ensure you won’t be blind-sided by sudden price increases, giving you the time to prepare before they go into effect.
Look for backup suppliers
While it is important to maintain a stable relationship with your suppliers, it is essential to know other places you can source from if your current suppliers have a lack of supply, long lead times or unreliable freight. These backup suppliers should be sourced in advance to lessen the stress of finding them while deadlines are approaching.
Negotiate discounts on repeated orders
Price rises from your supplier are bound to happen. You should work with your supplier to create a plan and build a relationship with them to ensure you will get the best price possible. A way to do this is by negotiating deals with them to receive a discount on subsequent orders. This also shows your loyalty and commitment to their company.
Monitoring/maintaining stock levels
It is important to monitor your stock levels to ensure you always have available what is needed for your business to run smoothly. Maintaining these stock levels guarantees that you have these products readily available and can provide for your customers at the earliest opportunity. Preparing for the stock in advance also gives you time to negotiate with your supplier and get the best price possible.
Understanding your supply chain
Get an understanding of the processes used to manufacture your products, from sourcing the raw materials to final packaging and despatch. This will give you an in-depth product knowledge and help you to accurately forecast available supply and predicted costs. These insights on your supply chain will help you understand the manufacturing processes and costs involved with your products, ensuring you avoid being overcharged by your supplier.
The csg Advantage
csg provides you with more stability through having a vertical integration which allows us to grow and source our own grain to manufacture stockfeed products, ready for despatch to resellers.
A vertically streamlined supply chain eliminates the need for involvement of different suppliers in each stage of the supply chain.
csg also supports you by having:
- Competitive market pricing: At csg, we can offer highly competitive pricing as our vertically integrated supply chain gives us greater control over grain supply and availability.
- Monthly price updates: csg gives all resellers monthly price updates. These consistent updates allow resellers to know in advance any pricing changes and adjust for these as necessary.
- Exclusive reseller rewards: The csg reseller program rewards our resellers for their continued business. It allows you to collect points for every purchase you make which become redeemable through gift cards or free stock.
Summary
Pricing increases are becoming increasingly common, and it is important to know how to respond to these increases to maintain profitability in your business. Start by having an open conversation with your suppliers to negotiate discounts and get an understanding of the full supply chain. Don’t limit your product range to one supplier, and make sure you monitor stock levels regularly!
References & Useful Articles
- How To Respond To Supplier Price Increases: Is Cost Reduction The Way To Go?
- How To Respond To Supplier Price Increases
- 5 Tips For Dealing With An Unexpected Price Rise From Your Chinese Supplier
- How Inflation Is Affecting Retail Businesses?
- Inflation In Retail: Everything You Need To Know (2022)
