Inflation has been on the rise in recent years, averaging around 3.90% since 2017, producing a cumulative price increase of 21.09%. This means that today’s prices are 1.21 times higher than average prices since 2017, according to the Bureau of Labor Statistics consumer price index. A dollar today only buys 82.645% of what it could buy back then. At first, this may not seem like much, but it can have a significant impact on your e-commerce business.
When it comes to managing a retail business during a period of high inflation, there are a number of things that you need to keep in mind. First and foremost, you need to be aware of the impact that inflation can have on your business. Inflation can cause your costs to increase, which can eat into your profits. It can also make it difficult to pass on price increases to your customers, as they may be reluctant to pay more for your goods or services. Fortunately, there are a number of ways that you can manage your retail business during a period of high inflation.
Here are a few tips:
1. Review Your Prices Regularly
To stay ahead of inflation, you need to be regularly reviewing your prices and making sure that they are in line with your costs. This may mean increasing your prices on a regular basis, but it is important to do this in a way that does not alienate your customers. Try to give them as much notice as possible when you are planning to raise prices, and make sure that you are fair in your pricing.
2. Make Use of SEO
To stay ahead of the competition and increase sales you need to make sure that your customers are finding you. Make sure that you are using SEO tools and tactics so that customers are finding your store organically. Remember that the organic traffic is the cheapest traffic you will get, reducing your customer acquisition costs and eventually driving profitability.
3. Look For Ways to Cut Costs
Inflation can eat into your profits, so it is important to look for ways to cut costs where possible. One way to do this is to review your suppliers and see if you can get better deals from them. You may also want to look at ways to reduce your overheads, such as by downsizing your premises or cutting back on unnecessary expenditure.
4. Promote Special Offers and Discounts
In periods of high inflation, customers can be reluctant to spend their hard-earned cash. To encourage them to part with their money, you may want to promote special offers and discounts. This could involve offering discounts on certain products or services, or running special promotions.
5. Review Your Payment Terms
If your business offers credit to customers, you may want to review your payment terms in light of inflation. You may want to shorten the terms to encourage customers to pay sooner, or you may want to increase the interest rates that you charge. Unlike some other countries, the US had been late in introducing installment options to online shoppers, but today there are several companies offering this solution. Make sure that you offer buy now pay later options to your customers.
6. Build a Loyal Customer Base
In periods of economic uncertainty, it is more important than ever to build a loyal customer base. This means providing excellent customer service and offering value for money. If you can do this, you will find that your customers are more likely to stick with you during tough times.
Managing a retail business during a period of high inflation can be challenging, but it is not impossible. We would be happy to help you select correct tools to navigate these difficult times, feel free to reach out.