Retailers Need A Stronger Supplier Plan As Margins Go Under The Microscope

Retailers relied on pricing to solve a lot of their problems last year. Staggering input costs, including those related to energy, transport, and raw materials, were only manageable because they could be passed on to customers. However, as economic growth slows and the Federal Reserve continues its aggressive rate increases to tame inflation, consumer buying power is diminishing as well. This means that retailers will have to look elsewhere to combat rising costs as they try to maintain margin dollars.

Despite measurable declines in the price of core input commodities, including freight, plastic, steel, cotton, etc., pushing back on suppliers has proven to be harder than anticipated given continued labor scarcity and the resulting higher input labor cost. Manufacturers have been steadfast: While prices went up like a rocket, they are coming down like a parachute.