We’re in a time of great uncertainty. Record inflation levels, continued supply chain challenges, and more contribute to changes in the world economy, especially for companies trying to move physical products. So what does that mean for us? It’s not just about knowing what to do now. It’s about taking a step back and figuring out what the future holds. We can’t wait to see what the world looks like in 2022. Below we’ll explore some considerations for retail businesses in light of inflation.
Budgets Need More Care
With inflation levels higher than ever, your budget will likely be tighter than it has been in the past. It will be essential to take into consideration rising costs for transportation services, leasing spaces, and product production. As the world begins to settle into the post-pandemic “normal,” it will no longer be as straightforward to simply look at last year’s budget and use that as a guideline. There have been too many changes to prices, demand, and systems, so be prepared to put more time into budgeting.
Warehouse Space Challenges
When thinking about the supply chain challenges of the past couple of years, most people immediately think about cargo ships held up at the ports and other similar delays. However, another rising challenge recently has been accessing warehouse space for retail businesses. Many retail companies ramped up their e-commerce efforts during the pandemic and saw significant drops in revenue from physical storefronts. This led to the closure of many storefronts, but not necessarily a decrease in business overall. Instead of having a lot of their inventory on the shelves, businesses need warehouses to store products and process orders to ship out.
This increase in demand has led to warehouse scarcity and dramatically rising lease costs. Paired with increased labor and production costs, retail businesses are scrambling to find where they can make budget cuts and how to shift their processes to maximize efficiency.
In 2022, there will likely be considerable changes in the global economy and in the stock market, which will impact both consumers and businesses. You won’t be able to name your budget as you did in the past, and you will need to be aware of the space issues before they become a problem. You will also need to protect your products and risks from any overspending.