Everyone from the veterinarian to the hairdresser is raising prices.  And there's no relief in sight |  CNN Business

Everyone from the veterinarian to the hairdresser is raising prices. And there’s no relief in sight | CNN Business


Minneapolis
CNN Business

When Teri Byrd opened her 4 Paws veterinary clinic in Vashon, Washington four years ago, her goal was to grow the business.

And she succeeded – at first.

But Covid has disrupted his business as it has for many others. After the first pandemic closures, his business was helped by federal aid and a surge in pet adoptions, but supply chain disruption, labor shortages and soaring prices have left him forced her hand – she eventually had to raise the clinic’s prices.

Medical supplies had increased by around 25% to 30% across the board, and many of its employees left the field, making it all the more difficult and expensive to recruit qualified candidates on the island where it is located. find his clinic. Some days she had to close the clinic because she had no staff available. She raised her pay by $10 an hour for technicians and $5 an hour for assistants, and she cut her personal salary from $150,000 to $65,000.

4 Paws has been sold out for a short time, but months of price pressures have taken their toll.

Teri Byrd of 4 Paws Veterinary Clinic in Vashon, Washington.

“I finally [raised prices] Last week. I’ve never done it before and I really didn’t want to,” Byrd told CNN Business. “I could see the writing on the wall. I should have closed the clinic.

The decades-long inflation spree that has weighed heavily on Americans for much of this year has, in recent months, taken hold more deeply in businesses that provide services like animal care, haircuts and dry cleaning.

While the production of goods sectors have a variety of costs to consider, including supply chains and commodity price volatility, the biggest expense for service firms is labor, said Agron Nicaj, U.S. economist for Japanese bank MUFG.

Over the past year, wages have risen, thanks in part to an extremely tight labor market that has developed as the country recovers from the pandemic. Unlike goods prices, which are more dynamic and can move up and down with supply and demand, wages tend not to adjust downward.

And this is exactly where inflation can get “sticky”, which means that once the prices for the services go up, they tend to stay at those levels for a while.

“When you have strong price pressures in the service sector, they are likely to last longer,” Nicaj said.

And that’s troublesome for consumers, small business owners and, in particular, the Federal Reserve, which is trying to extinguish stubbornly high inflation, said Christopher S. Rupkey, chief economist at the economics research firm. and market FwdBonds LLC.

“The Fed is going to need a bigger pipe if it wants to put out the fire of inflation, because once price increases have spread to services, it’s a tough battle for a central bank to win without raising prices. interest rates high enough to produce the destruction of demand normally seen only in severe recessions,” Rupkey told CNN Business.

The wider economic uncertainty and wild price swings that marked 2022 have turned running Hairrari, a New York-based hair salon, into a game of chess, said Magda Ryczko, who started the business. in 2011 and has since expanded to three New York locations. and one each in Los Angeles and Portland, Oregon.

The price of laundry detergent per pound has gone up, electricity has skyrocketed and the cost of living has risen for Hairrari staff, many of whom have worked there for nearly a decade.

“I think this year we adjusted our prices two or three times,” Ryczko said.

Previously, a new style and cropped cut cost $65 including tax. Ryczko kept the cost of the discount at $65, but asked customers to pay tax on top. As costs rose and the New York market rate for haircuts increased, she jacked up the price to $70 and $75 for most customers. (She added that some are still $65).

Magda Ryczko works at the Hairrari hair salon in New York.

“It’s not really high-end, it’s not really low-end; I like to keep my mark in the middle,” said Ryczko. “I feel like once we lifted [prices,] I don’t think they are coming back down. This is the risk you also take as a business by raising prices, because you risk losing customers.

For Ryczko, it’s an exercise in strategic balancing act. She’s tried to offer discounts and paid services to customers who can’t afford the raise, but she also views the raises as a reinvestment in her business and people.

“I just want people not to struggle so either way I could maximize the wages I could pay so people can be happy and stay with me for a long time, I think that’s really important,” he said. she declared.

Some customers have been understanding, she said, noting feedback she’s received from customers who Appreciate Hairrari’s inclusive and gender-neutral approach and efforts to provide free and discounted haircuts to community members and organizations.

“They say they’re so proud of us,” she said. “When we hear these comments, it is worth it. It just goes to show that the more positively they look at it, the more they understand.

She added, “Dinner is $100 in New York. It’s just relative. »

The cost of so many seemingly insignificant parts that go into running a dry cleaning business – plastic bags to wire hangers — have grown significantly over the past year, said Steve Collins, the third-generation owner of Sig Samuels Dry Cleaners in Atlanta.

Broy Crosby (left) and Steve Collins (right), owners of Sig Samuels Dry Cleaners in Atlanta, Georgia.

The biggest challenge right now, he said, is finding a way to cover some of those extra costs by charging more — without feeling like you’re scamming customers at a time when everyone has to shell out. more money.

Collins’ approach has been to make small, incremental increases: Last year, a pair of pants cost $5.75 to clean; a year ago it was $5.50. Now the price is $6.25.

“Increasing a quarter here or a quarter there is significant,” he said. “It might not be for one person coming to see me, but those quarterbacks add up.”

Collins also took the approach of expanding the scope of services from Sig Samuels, which had previously focused on professional attire.

“I’ll do anything from drapery to washing and folding household towels and underwear,” he said. “We didn’t do this before.”

Collins joked, “Heck, I’ll wash your dog, if he’s not a biter.”

Every time he’s had to raise prices, it’s been difficult, Collins said. But it was necessary to keep the dyer in business.

“We don’t have any plans in place to go back, but we hope to stay stable for as long as possible while making sure we increase the way we can take care of our people,” he said.

Genora Boykins and her business partner, Sharon Owens, run The House in Midtown, a seven-room bed and breakfast in Houston, and they’ve seen inflation in the cost of eggs, bacon, bottled water, cleaning supplies , soaps, toilet paper and other products.

Genora Boykins and Sharon Owens at The House in Midtown, a seven-room bed and breakfast in Houston.

“I don’t know of any product that we use that hasn’t gone up in cost,” Boykins said.

But being in the hospitality industry, they try to be very aware of any potential negative effects on a guest’s experience, so they’re not willing to pass on all those costs.

“You want to stay competitive, so you can’t just continually raise your room rates over and over and over without consequences,” she said.

To reduce some of the financial impact, Boykins and Owens are now checking with customers if they want breakfast, so food isn’t wasted. They try to encourage longer stays to avoid the cost of rotating a room every day. They are constantly looking for bargains on supplies.

“We’re just optimistic things are going to get better, things are going to get better,” Boykins said. “Even if it doesn’t necessarily go well, at least you don’t want [prices] keep getting worse month after month after month.

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