Keep an eye on prices in 2009
As many of us recall, price increases were one of the big stories in 2008.For a while, it seemed a month or even a week wouldn’t go by without suppliers announcing another raw materials price hike caused by factors ranging from higher fuel costs to increased global demands.
Consumers are feeling those effects to this day. And that’s not a good thing given the current state of the economy. If anything, price means more than ever to cash-strapped consumers.
But with news of mounting layoffs, falling home prices and declining stock portfolios, you don’t hear a lot about price hikes lately. In fact, falling fuel prices and reported drops in the cost of raw materials such as steel seem to have created a small sense of stabilization.
In addition, many factories in China running at low capacity, a factor that could help boost U.S. importers’ negotiating capacity. And realizing the plight of manufacturers, the Chinese government is even reportedly reinstituting some Value Added Tax rebates it has taken away on exports such as furniture.
You would think all this would have an effect on prices this year. But will it? Some in the industry think so. But, they counter, this could be offset by rising costs associated with meeting new government regulations such as reductions in formaldehyde emissions required by the California Air Resources Board.
What do you think will happen with prices this year on imported goods in 2009? Will the industry - and the consumer - see some relief? Or are we in for another rollercoaster ride?
Elizabeth commented:
i likez cheeze :)
Elizabeth commented:
CAN YOU TELL ME THE PRICE OF CHEESE???!!! HUH??????!!!!!!!
Elizabeth commented:
YOU SUCK YOU DONT TELL US ANY GOOD PRICES!
Roger commented:
Hard to say on this one. Some factories have figured out that this is a very price sensitive period and are working to push prices lower to accommodate this. This seems to be especially true with those suppliers that hold large amounts of inventory. They know inventory is not cash. But this is not true of all of them - some of them simply refuse to budge at all which may be a common Chinese mentality (if the supplier is in China). Definitely too early to say yet. www.millstonetrading.com
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MD commented:
What this fails to take into account is that there are other costs besides freight and materials. If the operating and admin costs of running a factory were 20% of the product's cost structure when the business entered 2008, then they may be 30% today if the company has lost enough volume due to the lower rate of incoming orders. That is because the factory has certain fixed costs (even after headcount reductions) that do not get absorbed at the same level when business slows. The kind of decrease that our industry has seen since early 2008 is more than enough to greatly offset any small gains in material and fuel costs. The fastest way to go out of business is to reduce prices and become unprofitable for the sake of increasing sales. The only exception is if you have been operating on an extraordinarily large operating profit before such a time and therefore have the room to sacrifice excessive Net Income (some would argue that there is no such thing in our industry).
joe commented:
at my store the prices are going up not down, every day we get email that something is going up sofa that were 699.00 are now 999.00 and we put them on sale for 799.00..our upper end sofas are 1799.00 on sale for 1499.00 and the matching chair is now 1049.00 so in some stores prices are going up up and maybe way!!! Afraid that I might loose my job because of increase in price with no discounting and change in commission
FOV commented:
Pricing on imports have been dropping for the last couple of months.
Mainly based on raw materals suppliers scaling back price hikes, due to sharp declines.
