Normality is slowly returning

Anyone who looks at this blog regularly will notice it has been quiet for a few weeks. However there seems to be some normality returning to the business after a few challenging weeks.

I have written before about the challenges of stock and the supply chain. For the first time in a long while I am sitting here and thinking we actually reasonable availability across the board. By no means is stock availability back to what it was 12 months ago. However, it is fair to say it is the best it has been in the last six months for sure.

Fingers crossed we have run out of challenges. Ports now seem to have settled down and stock is coming in more smoothly. Stockpiling before Christmas due to the impending ‘no deal’ situation caused mayhem. Many a time it made national news, with the BBC news website regularly running stories. I can confirm from our experiences that they were very true. A number of times suppliers of ours had containers stuck for weeks on end as they could not get a collection slot.

Normality at a price

Unfortunately normality has come at a price. Since the issues of December and early January the cost of container and sea freight has risen very significantly.

What has happened after the mad dash to get freight into the UK to beat the Brexit deadline is that there has become a shortfall of empty containers in the far east. This coupled with ships out of place due to the delays on ports means prices have gone up significantly. It is a true case of supply and demand dictating price, as at the moment demand is oustripping supply noticeably in the shipping sector.

There is a well published theory that some of this will relax over Chinese New Year. The argument is that output and demand will drop for the 2 week period, allowing some form of rebalancing of the sector.

Fingers crossed this is the case… Current retail prices are unsustainable in the long term if the shipping surcharges we are paying continue. Some items we are paying nearly a 20% levy on due to the five fold increases seen on import freight prices.

As a business we are fortunate to be well positioned and able to ride out the storm for a reasonable period yet. So far all we have had to do is reduce promotional activity a small amount.

So if you ask us for a discount, don’t be surprised if we politely decline. We may of course still offer one, but perhaps not to the level of before. Every deal request is assessed on its own merits, and against any hidden costs we may have. Longer term we may have to look to increase retail pricing, but this goes against what we stand for. However, having said that we pride ourselves on our service, and at times that costs money. And our service standards is something we have worked hard to build, and don’t want to let drop.

One thing is for sure, whilst normality is returning, there remain some tough decisions ahead. All that being said, we wouldn’t change our DNA for one minute. Being a small business with a close knit team makes the job much more satisfying, and gives us the ability to make decisions a ‘big corporation’ couldn’t.

SK Home Furniture – big enough to compete, small enough to care.

That has been our strapline for years – and long may it continue for many years to come.