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Local small businesses generally less affected by price increases

by BRET ANNE SERBIN
Daily Inter Lake | October 24, 2021 12:00 AM

With inflation on the rise, there’s a big advantage to being a small business.

Independent business owners in the Flathead Valley are reporting less of an impact from the rising cost of goods compared to their larger corporate counterparts. But even so, many local businesses are concerned about what lies ahead in terms of product availability and inflation.

Vincent Rannazzisi, the grocery manager for Third Street Market in Whitefish, said that business hasn’t been hit too hard yet with price increases because it gets a lot of products from smaller farms.

Rannazzisi said he has heard about larger grocers feeling the effects of price increases, particularly for meat products such as pork and beef. He explained “larger producers” account for most of those cost hikes. “It depends on where you’re getting your products from,” he pointed out.

His counterpart in the hardware industry corroborated Rannazzisi’s experience.

Jeff Brown, the owner of The Hardware Store in Evergreen, said inflation hasn’t caused as many issues for “local businesses, non-franchise businesses like myself.”

“It’s across the board,” Brown acknowledged. “It’s affecting everybody.”

But, he said, “We’re doing our best on the retail side to keep things very moderate.”

Brown explained independent operations like The Hardware Store have more freedom to adjust their prices and their orders than big corporations can manage. He observed how larger franchises tend to immediately change their prices based on market fluctuations, even before a shipment of higher-priced goods actually arrives on their shelves.

Brown said he makes an effort to adjust his prices based on real-time circumstances. So far, that has meant keeping prices down without requiring the business to take a loss on the difference. Many of those would-be differences, Brown explained, simply haven’t shown up yet on the buying side of the equation.

Jandy Cox at Rocky Mountain Outfitter also reported he hasn't seen “a ton of price increases in my industry,” But he anticipates the Kalispell sporting goods store will start to notice price increases toward the end of the year.

Cox explained he orders his products a year or more in advance, so the prices reflect market conditions from at least 12 months before a customer walks into his store.

For example, Cox said, “Freight costs have gone up exponentially but I haven’t really seen that reflected in terms of pricing.”

He expects to see the cost of skis, for instance, go up in December when he goes to a trade show and orders ski products for next winter.

But, Cox stressed, “I don’t really know what to expect.”

ALUMINUM SHORTAGES, manufacturer shutdowns and shipping issues are all at play when it comes to outdoor gear, specifically skis.

“For a small business, I’ve bought as much as I physically and emotionally can with the hopes of being able to cover everybody’s needs,” Cox said.

Even though inflation hasn’t driven up prices at businesses like Rocky Mountain Outfitters, the related scarcity of products has made it harder than ever for business owners like Cox to predictably place orders.

He and Rannazzisi both said attempting to plan out their buying practices has been one of their biggest challenges in the past months.

“I’m sort of juggling, trying to get as much up front as we can,” said Cox. “I’m anticipating running out in the sort of early midseason.”

Some products could run out even sooner. Cox said cross-country skis are the hardest product to find for Rocky Mountain Outfitter.

At The Hardware Store, copper products seem to be showing the effects of inflation more than other items.

Auto parts suppliers such as Valley Motor Supply Co. are struggling with supply shortages of oil filters and radiators.

OUTSIDE OF retail businesses, steel and concrete shortages have delayed construction on the new Glacier Gateway Elementary School in Columbia Falls. According to the Hungry Horse News, only one out of 10 steel shipments has arrived for the project, even though the metal was supposed to arrive in August.

But according to experts, the most challenging product right now in terms of price is one of the most essential — fuel.

Patrick Barkey, Director of the Bureau of Business and Economic Research at the University of Montana, said the energy sector is seeing the most significant price increases of any industry.

“Right now, it’s clearly coming from energy,” Barkey said. “That’s probably the one that really jumps out.”

Energy prices are up as much as 40% compared to this time last year, he said.

But Barkey said energy price increases are a typical trend during times of inflation. The rising costs in the goods economy are much more unusual.

“Now the story is a lot more complicated,” Barkey observed. “We have a couple things going on that tend to broaden the footprint of inflation.”

He cited shortages of transport and labor, plus increased spending on the consumer end, as causes contributing to inflation of goods, such as a 10% uptick in meat prices from last year.

“Consumers are spending like drunken sailors,” Barkey said candidly. All those factors together don’t bode well for the future, in Barkey’s estimation.

“It’s all adding up to a perfect storm for more inflation ahead,” Barkey warned. “That’s yet another problem. Some problems are solved and some problems aren’t.”

Reporter Bret Anne Serbin may be reached at 406-758-4459 or bserbin@dailyinterlake.com.