July 27, 2021
KBB retailers and manufacturers should think twice before putting up prices because there is greater demand for products and services, warns Wayne Dance, MD of InHouse.
Dance points out that once manufacturers raise prices because of raw material price hikes or component shortages, they rarely come back down again, and retailers end up having to pass that cost on to the end consumer.
He also warned retailers of the reputational damage they may suffer as a result of price hikes on kitchen appliances and increased installation costs because installers and trades are in short supply – both of which can delay project completion.
Dance said: “Before we all rush out and put our prices up because there’s greater demand for our kitchens, bedrooms and bathrooms, I urge you to stop and think. What’s more important to us? Short-term gains or long-term survival? I would encourage you to adjust your sales accordingly, even if the wind is behind you.”
Dance said: “When certain components for your appliances are stuck in China, manufacturers pay over the odds for goods in short supply. Prices for their appliances go up and, by the way, they rarely, if ever, go back down.
“Retailers need to pass these price increases on to customers to protect their margins. And that makes goods more expensive, reducing the number of people who can afford them. It’s a compound effect of supply-chain economics and it’s the customer who ends up feeling the brunt of the impact. Wise manufacturers are those who take a long-term view. They work with their retailers to protect their margins, so customers are protected from price hikes.”
Dance points out that kitchen manufacturer Schüller has said that, despite the high demand, there would be only standard inflation-rate price hikes and no change to delivery costs.
High levels of demand have meant that installers who are already thin on the ground are busier than ever, which, warns Dance, means the service provided to the customer could suffer too. He said: “When trades are busy, their prices go up. Customer service can get shoddy. While customers might have their backs against the wall, they will likely pay. However, this creates ill will and you can be sure they won’t leave good reviews or recommendations. Brands can easily be damaged by this type of short-term opportunism. It’s not good business and it’s not good for your reputation.”
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