In June of 2022, the cost of living in the United States rose at a rate of 9.1%, which was the highest since November of 1981. The increase was primarily due to inflation, which is steadily becoming a larger and more significant threat to consumers and businesses alike.
In recent years, the rise in inflation has placed a strain not only on working families but on businesses as well. In addition, the COVID-19 pandemic has left a deep impression on the economy, showing little sign of significant improvement anytime soon.
The great news for retailers is that many digital technologies and merchandise distribution solutions can offer significant savings. Moreover, that savings can translate into substantial additional revenue for your business.
In this brief guide, we look at several strategies that can help save you as a retailer from the fallout of inflation.
What Is Inflation?
A combination of factors typically causes inflation. For example, the Federal Reserve can influence inflation in the United States by changing interest rates. When the Fed raises rates, it slows the economy and can lead to lower inflation.
Other factors that can cause inflation include:
- An increase in government spending
- A decrease in taxes
- An increase in the money supply
- A decline in productivity
- A rise in the price of oil
Inflation is how sharply and quickly the prices of goods and services rise. It erodes purchasing power, making it difficult for consumers to buy as much as they could in the past. Businesses are also affected by inflation because it raises their costs. For example, if a company needs to purchase new inventory, the increased cost of goods will eat into profits.
Inflation can have a ripple effect on businesses throughout the economy. In addition to raising the cost of goods, it can also lead to a decline in consumer spending. This is particularly harmful to retailers, who are already struggling in the current market.
There are two essential types of inflation: demand-pull and cost-push.
Demand-Pull Inflation
Demand-pull inflation happens whenever there is too much demand for goods and services in the economy. This happens when the economy is growing too quickly or if there is a sudden increase in demand, such as during a war.
Cost-Push Inflation
Cost-push inflation occurs whenever the cost of producing things rises. This can be caused by an increase in the price of raw materials or a decrease in productivity. Cost-push inflation is often referred to as “supply-side” inflation.
How Does Inflation Affect Retailers?
Inflation affects retailers in several ways. First, it causes a decline in consumer spending. Consumers have less money to spend on other items when prices go up. And as people become less likely to purchase discretionary items when prices rise, retailers see a decrease in sales.
Inflation also typically leads to higher interest rates. This makes it more expensive for businesses to borrow money and can lead to lower profits. Another way inflation affects retailers is through inventory costs. As the cost of goods goes up, retailers have to spend more money to purchase new inventory. This can have a significant impact on profits and make it challenging to keep prices low for consumers.
Finally, inflation can lead to currency devaluation. This makes imported goods more costly and can lead to lower sales.
For all these reasons, retailers need to understand how inflation affects their business and take steps to hedge against its effects.
Strategies to Save Your Business from the Effects of Inflation
Not even the forces of inflation can overcome an intelligent strategy or a thoughtful plan. There are several strategies that retail businesses can use to save their businesses from the effects of inflation:
Review Your Pricing Strategy
To stay competitive, it’s essential to review your pricing strategy regularly. This will ensure that your prices are in alignment with the market and that you’re not overcharging or undercharging for your products.
Get Creative with Your Marketing
To reach consumers, it’s essential to get creative with your marketing. This might mean using social media or email marketing instead of traditional advertising. It can also mean revisiting your retail displays and going digital instead of relying on print ads or other older approaches.
Automate Your Processes
Automating your processes can help you save time and money. For example, you can get real-time alerts when inventory levels are low and automatically place orders with suppliers by automating your procurement process.
Review Your Expenses
To reduce costs, it’s essential to review your expenses regularly. This will help you figure out where you’re overspending unnecessarily and make changes accordingly.
Increase Your Online Sales
Increasing sales online is a great way to offset the effects of inflation. Not only do online sales tend to be less affected by inflationary pressures, but they also allow you to reach a larger audience.
Think Long-Term
Inflation is a long-term phenomenon, so it’s essential to think long-term when making decisions for your business. This might mean investing in digital technologies that can help you save money in the future or looking for ways to cut costs today that will pay off down the road.
Digital technologies can help retailers save time and money by automating processes, reducing costs, and increasing sales. In addition, implementing these technologies can help retailers keep their businesses running smoothly, even in the face of inflation.
How to Deal With Inflation in a Business With Interactive Displays
Many businesses are struggling to keep up with the rising costs of inflation. As prices for goods and services continue to increase, it can be challenging to maintain a healthy profit margin.
One way to deal with inflation is to add interactive displays for retail price management. By adding these displays, businesses can quickly and easily adjust prices as needed. This can help to ensure that prices stay competitive while also helping to reduce the overall cost of doing business.
In addition, interactive displays can help to boost customer satisfaction by providing a more user-friendly shopping experience. As a result, adding these displays is an effective way to deal with inflation in a business.
How Digital Technologies Can Help Retailers Fight Inflation
Retailers have several options when it comes to fighting inflation. One way is to use digital technologies to reduce your costs:
Automate the Procurement Process
Automating the procurement process can help retailers save on costs. For example, by using an automated system, retailers can get real-time alerts when inventory levels are low and automatically place orders with suppliers. This can help avoid situations where retailers are forced to pay inflated prices for goods.
Use Data to Negotiate Better Deals with Suppliers
Most businesses have a lot of data but don’t know how to use it effectively. This is especially true for retail businesses, which generate large amounts of data on a daily basis. For example, if a retailer knows that a particular supplier is selling to other businesses at a lower price, they can use this information to negotiate a better deal.
Use Technology to Drive Down Costs
Retailers can use technology to drive down costs in many ways. For example, by using cloud-based applications, retailers can reduce IT costs. And by using social media and email marketing, retailers can reach consumers without spending on traditional advertising.
Increase Online Sales
Increasing sales online is a great way to offset the effects of inflation. Not only do online sales tend to be less affected by inflationary pressures, but they also allow retailers to reach a larger audience.
By taking advantage of these digital technologies, retailers can fight back against inflation and keep their prices low.
Digital Technologies Can Help You Weather the Storm
Digital technologies can help businesses save time and money by automating processes, reducing costs, and increasing sales. In addition, implementing these technologies can help enterprises to keep their operations running smoothly, even in the face of inflation.
Inflation can be a challenge for businesses, but it doesn’t have to be a death sentence with the right strategies. By taking advantage of digital technologies, businesses can fight against inflation and keep their prices low.
If you’re looking for ways to cut costs that will pay off down the road, look at our interactive displays for retail price management. Our displays can help you quickly and easily adjust prices as needed, ensuring that your prices stay competitive while reducing the overall cost of doing business. Contact us today to learn more!