Despite optimistic predictions inflation would decline, it’s been unrelenting of late. In the United States, inflation jumped 8.5% in April from a year ago to reach the highest level since 1981. Although economic conditions can certainly change, most of the indicators don’t intimate inflationary pressures will ease. Persistent supply chain bottlenecks, the ongoing war in Ukraine and coronavirus lockdowns in China continue to push up an array of consumer goods prices.
Beauty retailers are definitely not immune from inflationary impacts. They’re confronting higher packaging and transportation costs, long supply lead times and elevated prices from their vendors. For the latest edition of our series posing questions relevant to indie beauty, we asked 11 retailers and e-tailers the following questions: How have added expenditures, MSRP [manufacturer suggested retail price] increases and supply chain delays affected your business?
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Chelsy Gray Founder and CEO, Adaya Beauty We have seen some of our brands increase their MSRPs by about 5% on some of their bestselling items as supply chain delays have impacted their small businesses. This has made us more strategic in our promotional cadence and strategy with the new increases.
As for Adaya in total, we are even more conscious of our ROI on any new products we buy, site updates, promotions we run and business practices we make so that we can make sure we are being frugal on the things that don't move the needle but spending on what creates value for our customer.
- Dave Bolotsky Founder and CEO, Uncommon Goods
We have seen a dramatic increase in transportation costs and delays, and have seen our suppliers raise their prices. We have selectively increased prices and are testing another round of price hikes in the coming weeks. It is hard to tease out the impact of inflation since the COVID impact—both positive and negative—has had more of an influence on demand.
- Susana Kempen Owner, Daisy Organics
Daisy Organics has experienced some delays since the pandemic began especially with brands and their product packaging. We have also seen an increase in a lot of brands' pricing, and lastly we have had issues ourselves with reordering our own shipping supplies.
Thankfully, we have been able to manage pretty well, but it has definitely affected our business, and it has affected our customers with longer wait times for products. It has now almost become the new norm, and longer wait times are almost always expected with most of our brands.
- Marti Moore Founder, Melanin Grace
The pandemic affected the supply chain and the cost of raw materials, forcing makers to increase their wholesale prices and MSRPs early on. The war has compounded the problem, increasing the price of gas and shipping, which put pressure on shipping thresholds.
So far, these increases haven't affected MG's retail sales. However, consumers will feel more pressure to make choices with rising inflation. As a small business owner without the scale to absorb the cost of all these increases, it's essential to find creative solutions to add value for my customers.
- Ian Ginsberg President, C.O. Bigelow
In the beginning of the pandemic, we were first introduced to the potential onslaught of supply chain delays specifically with packaging. We were able to sneak through it, but, with the uncertainly, we loaded up on components with subsequent reorders. The thought of not having enough components on hand to fill was a little scary.
Fortunately, we had the resources (cash and space) to support loading up, and we thought all was OK. Now, much of the supply issues have moved on to ingredients, and I’m afraid this is something a little more out of our control. We are now faced with placing larger orders much further in advance to give us a little cushion and breathing room as there is nothing more frustrating than having demand and no supply. Of course, all of this puts enormous pressure on your costs as well, and the added increases have put even more pressure.
We had made some prices increases early on in the pandemic where we could, but no one could have predicted what is happening now and what could be a long haul moving forward. For now, we have chosen to keep prices as they stand and are doing our best to be mindful of our spending and our cash management. The costs are rising all around us between massive increases in domestic and international freight, components, ingredients, production costs, marketing, etc. You can only do what you can do….preserve cash, make smart decisions and be mindful of your spending.
- Jeannie Jarnot Founder and CEO, Beauty Heroes
As a retailer, we represent over 100 brands from around the world. Price increases have come through for most of our brands. I’m not going to lie, it’s hard to get such widespread price increases all at once. When brands implement a price increase, we of course honor it. It’s out of our control.
What concerns me most as a retailer is the widespread deep discounting that some brands (and retailers) are practicing. I feel like we are witnessing an unsustainable cycle. Brands are discounting their products at an unprecedented rate, undermining their own price integrity, and at the same time, increasing prices. It’s hard to watch. We are monitoring promotional activity and discussing it openly with our brands.
As far as our costs, yes, indeed, everything is going up, from the price of printing and paper to labor and the cost of shipping. We have not raised the price of our monthly subscription yet, but there may come a time when we may have to broach that. We also have not adjusted our shipping thresholds or costs, but we may have no choice but to do so.
When making these types of decisions, I try to really take the long view and make decisions that feel like they are sustainable, transparent and not terribly reactive.
- Jazmin Alvarez Founder and Chief Curator, Pretty Well Beauty
We have experienced quite a few delays and rise in MSRP from a few of our brands. Due to the rising cost of their raw materials they have been forced to increase pricing on some of their products. This has been the case for only a small handful of the brands at Pretty Well Beauty thankfully. There have also been shipping delays of not only raw materials, but product packaging, which has prevented us from being able to make certain products available to ship.
Its been very frustrating to say the least because it effects the customer experience and, in an area of business where loyalty can be fickle, this has affected sales tremendously.
- Oliver Garfield CEO, Cos Bar
As it relates to the direct impact on manufacturing COGS, and therefore margins, as a result of inputs within the global supply chain, Cos Bar is fortunate as a third-party retailer to be shielded from that. However, indirectly, there could be knock-on effects where our brands have less budget for store and promotional support as well as the obvious issue of stockouts.
Another advantage of third party multi-branded retail is, if there is a stockout in a given brand’s bestselling moisturizer, then we fortunately have other great moisturizers to offer our customers. In a strange way there is strength today in being a third-party multi-branded retailer with all these unfortunate macro headwinds.
I can share there is certainly a heightened focus on demand planning, and the good brands are either ahead of this on their own or partnering with us to align on forecasts.
We are starting to see price increases, but I’ve actually been rather surprised at the lack of frequency and magnitude. As we’re wrapping up our seasonal market meetings, I do see that changing in 2022, and I don’t think luxury brands should overthink that decision.
- Romain Gaillard Founder and CEO, The Detox Market
We are clearly seeing inflation and supply chain issues. We have also seen more and more brands increasing their prices, which makes total sense. Most of our long-term brands haven't changed their prices in years, so it was time for an increase.
If the price increase is less than 10%, the brand is strong and fairly priced, then we don't see a lot of pushback. Any price increase is here to stay, so my suggestion is that, if a brand is not planning to have a long-term price increase and is concerned about pricing out its customer, wait as long as possible to increase the price.
- Anna Hsieh Gold Founder and Herbalist, Dr. Anna Gold Herbal Tinctures
I am pretty well stocked with my herbal tinctures right now. Most of them were made and bottled in the last year, so the pricing on those are currently not affected. However, I have one formula which is running low in supply, and we are experiencing a shortage of some raw herbal ingredients from overseas.
Fortunately, I have multiple sources for raw herbs, but, if the demand outpaces the supply chain delays for both my suppliers, it will eventually lead to a delay in manufacturing for this formula. Fingers crossed this won't happen!
I’m also seeing a rise in prices for the cost of amber bottles. Currently, I have not raised my prices to offset those costs. I’m waiting to see what production looks like in the next year.
At the moment, one of the raw ingredients in my Defend tincture, Dried Bamboo Leaves (Dan Zhu Ye), have been out of stock. I source all my herbs from an herb company that provides certified organic or pesticide-free plant products that are sustainably harvested.
Some herbs can be sourced from growers in the United States, but some only grow in specific climates and terrain in Asia. The herbs from Asia are beginning to get held up by the supply chain disruption due to COVID. I’ve also seen a 5% to 10% rise in prices for acupuncture needles this year. Thus, I’ve had to raise my clinical treatment prices.
- Kirstin Ratcliffe Senior Category Manager of Beauty and Personal Care, Thrive Market
In general, yes, we are seeing many of our brand partners facing these cost impacts and, in turn, raising MSRPs, but, at Thrive Market, we're doing everything we can to work with our partners to help minimize these cost impacts for our members and ensure that the Thrive Market retail prices are still at minimum 10% to 15% below the average price in the market.
We always aim to provide the best pricing in the market given our membership model. Our planning team is also padding orders to help mitigate potential issues related to supply chain.
If you have a question you’d like Beauty Independent to ask beauty retailers, entrepreneurs, executives and experts, please send it to editor@beautyindependent.com.
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