Subscribers Offer Their View of Inflation and Price Increases

No one seems to be sure to what extent but it's coming in a big way for the first time perhaps since the 70s or early 80s.

“With the price of raw goods increasing, price increases should be evident across all product categories. Retail spending will change depending on the individual needs of the consumer. In our institutional business we are aware that schools have set budgets to spend and yet still expect the same product quality. They will search for service providers to meet those needs or additional funding to assist in making the up the difference.”
– Gary Barfield, EVP, Russell Athletic

“At Oboz we're doing our best to mitigate the substantial inflationary trends in Asian manufacturing. We've seen two nearly 20% minimum wage increases in the Guangdong region of China just in the last year. Additionally, monthly and sometimes weekly increases on raw goods and ongoing fuel surcharges from shipping companies have all had an impact on our internal margins. So far, we've been able to absorb or push out the timeline on small increases without impacting pricing. But we know that retail prices are going to have to increase in the next six months. When this happens, we will still aim to provide the most quality and value in footwear, mindful that the U.S. consumer is struggling. To do this, we'll keep our operations lean in order to bring the best product to market for the best price.”
– Josh Fairchilds, VP of Product and Marketing, Oboz Footwear

“Overall, as we said on our recent conference call for investors, we believe that consumers remain cautious with unemployment, gasoline prices, food prices, etc. on the rise. That said, we have been able to remain more than competitive in this environment because while consumers are cautious, they are spending on the products that truly inspire them. In our case, that is the newest technology and hottest styles in footwear. We trade at the premium end of the market – the best brands – and our customers are still buying when the product is compelling and the product lately has been very compelling. As far as specific increases anticipated, we have essentially made our buys through holiday and the vendor price increases we have seen through that period have been primarily in apparel, which is a small part of our business and not significant enough to make a meaningful impact. We'll see what happens with prices after that and will continue to monitor what our vendor partners do and we'll react accordingly. Again, as long as the product is compelling, we believe our customers will buy it despite price increases. So, the situation could potentially benefit Finish Line if the customer perceives the value to be commensurate with the price.”
– Sam Sato, Chief Merchandising Officer, Finish Line Inc.

“There are two types of inflation. One is caused by demand pushing prices higher. The other is manufactured by the financial system. We are in a perfect storm. The fed is printing money like a drunk and there is tremendous pressure on all raw commodities. The great leveler in this situation is the consumer is broke. Some of the brightest minds believe that what happened in the fall of 2008 was caused by the consumer’s inability to pay for the rapid increase in consumer prices and make payments on home loans that were exploding as interest rates climbed. The best advice is to stay away from the bank and stay liquid.”
– Mark Mertens President, A4

Impulse purchasing is a thing of the past and the consumer has become very picky and cost conscience.
– Brian Dani, Owner, CBS Boardshop, Lake Forest, CA

“Sporting goods numbers should stay on track. With the increase in numbers in the longboard market, I feel it should still maintain growth. With gas prices rising, people will be more apt to spend money on bikes, skates, and skateboards that do not require trips to the pump. Once you relate to the customer that a skateboard can be purchased for the same amount as a tank of gas, they are more likely to make that purchase, knowing that it will last longer than two weeks, and will not require driving around. It's how we relate to everything now.”
– Chris Bunch, Owner, Alpine Ski Shop, Sterling, VA

“Sure wish I had a crystal ball. Biggest impact on inflation will be oil. Due to the political situation in the Middle East oil may very well hit us all heavily in the pocketbook, from gas to heat in the near term. How that will affect sales across the board this year is anyone's guess. Our political 'experts' are reactive rather than proactive and we are at the mercy of the oil cartels. I believe that for every additional dollar the consumer spends at the pump or heating their homes will be one less dollar to spend on consumables, be it hard or soft goods.”
– Michael McGinley, President, Rivers West Apparel

“I think we are going to see us get hit with a new wave with gas prices going up and up. It was starting to loosen up a little, but I am cautious right now. Everyone is up on all the increases, but in the school business, budgets are getting tighter, so this is not helping. It is affecting everyone. We are all looking for new ways to get new sales. It will be another challenging year. We just have to be lean and aggressive.”
– George Kline, President, Bethlehem Sporting Goods
 
“Footwear prices from our top vendors have remained fairly static over the past three years, so I don't think loyal customers will be shocked to see our $100 “sweet spot” shift to $110. Also, we're a specialty retailer that dedicates a significant amount of resources for training staff, so making a little more money on each sale is a good thing. Where we'll need to be careful is managing our inventory to allow it to turn faster so we're not too heavily leveraged as a result of cost increases. I thing the running industry will be fine though. Running is addictive, and there are more people choosing to participate day that need our help.”
– Ted Kushion, Merchandise Manager – Footwear, Gazelle Sports
 
As long as the inflation is kept in check (and that's a big “if”), we're expecting to absorb any rising product input costs and avoid passing them on to the retailer. Obviously, our margins will be compressed a bit, but if consumers have more dollars (albeit they're worth less) and prices remain the same, I think we'll be able to make up any margin loss with increased volume.
– Tyson Andrus, Sr. Marketing Machine, Skullcandy
 
“As prices (such as cotton) rise, and people's incomes are not going up accordingly it does not bode well for consumer spending. Consumer reception to price increases? The consumer has still not completely recovered from the recession mentally and they are very cautious and always looking for the best price. With commodities like food and gas they have no choice but to spend, with sporting goods they can always cut back. How will this affect our business? We are still very cautious and as prices rise on oil and cotton related products, we believe the consumer is going to have less discretionary income.”
– Jerry Williams, President, Schuylkill Valley Sports

“With the turmoil in the Middle East, upheaval in Japan and the rapid increase in gasoline and raw material prices, the consumer is all but expecting some inflationary pressures to be passed onto them. I think just as impactful to the consumer however, will be the coming and expected cuts in social services, education, etc. as federal and state governments grapple with huge budget deficits and are forced to undertake drastic measures to live within their means. And while I in no way mean to diminish or trivialize the devastation and suffering in Japan, I believe that an economic tsunami is forthcoming, the recent stock market gains notwithstanding.”
– Stuart Snow, Director of Recruiting, Athletic and Team Sports, Nation's Best Sports

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