Pinch profit margins – Cortland Standard

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Yuner Gao/journalist

Eric Burroughs, branch manager of Cazenovia Equipment Co., adjusts a lawn mower whose price rose to $8,500 from $7,800 last April. “We really encourage them to order early,” he said. The typical wait time for a lawn mower is six to eight months.

Darrell Norton grumbled as he shopped at Cazenovia Equipment Co in Polkville, shopping is a growing challenge.

“Fuel oil for equipment, repairs and even auto parts – everything seems to be going up,” he said.

Over the past 12 months, the consumer price index rose 7.5% before seasonal adjustment, the US Bureau of Labor Statistics reported on February 10. It was the biggest 12-month increase since the period ending in February 1982, when it reached 7.6%, although it was down from a peak of 14.8% in April 1980.

“I would just say we’ve seen double-digit increases in some specific situations,” said Eric Burroughs, store manager of Cazenovia Equipment on Route 11 near Polkville.

Like lawnmowers in Cazenovia, prices have skyrocketed; one of the models fell from $7,800 last April to $8,500 today.

“In some situations, we’ve seen a 15% to 20% increase,” Burroughs said. “But it is something that we unfortunately have to have. We have seen a more frequent and higher percentage increase than in the past due to inflation.

Greg Dicola, owner of Affordable Home Furnishings on Main Street in Cortland, noticed the trend. In his store, bedding prices have risen sharply over the past six months.

“The price of furniture has gone up. I would say at least a 10% increase,” he said.

Its cost has also increased.

“I would give the best possible price, but gross margins have to be between 40% and 50% to survive and pay our bills because our bills are also going up,” Dicola said.

Most customers, Dicola and Burroughs said, don’t complain.

“Customers are going to pay for them because they know what’s going on,” Dicola said.

Availability, however, is another matter. Inflation combines with supply chain issues.

“In some cases, they have to wait six to eight months” for some equipment, Burroughs said. “But in the past, they almost brought him home that day. We just want our customers to know and understand that availability will not be what we have seen in the past.

“Normally, when everything was going well, we would get the product in a week or two,” Dicola said. “But it takes up to six months.”

Reduced availability has led Burroughs to encourage people to order these products early.

“We’re just struggling to find the product to meet the overall demand. It doesn’t matter what it is, whether it’s the individual parts needed for repair or maintenance, or a product item, like a lawn mower,” he said. “We’re just seeing a significant lag or a significant disruption between supply and demand.”

Supply chain issues also pose challenges, Dicola said.

“A lot of furniture is made in Vietnam, so what’s happening is that it got stuck in ports,” Dicola said. “Same thing with appliances, like we had appliances from Tennessee, and they had to shut down Whirlpool factories for two weeks. It creates a big mess.”

Rising fuel prices have also made distribution more expensive, they said, and that combines with raises for employees in the event of labor shortages.

“We have to give people a raise. If you don’t give people raises, other companies offer more money as bonuses. So it’s more money every week,” Dicola said.

“We make concessions on certain prices, particularly with regard to freight and transport. So ultimately it affects our gross margins,” Burroughs said. “So our gross margins have dropped, just because we’re trying to help customers get through this period of inflation”

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