Saturday, December 29, 2007

Falling US Dollar & Scandinavian Imports

We won't be making any doom and gloom predictions in this area but there is an anticipation of price changes on the horizon depending on the product line, the manufacturers method of shipping and the current stock levels of items already in the USA.

Lets start with the larger, heavier and more costly items such as furniture. These are product lines that are not typically kept on hand in large quantities in the USA to begin with. More often then not they are shipped via container across the ocean, unloaded in Canada and then trucked into the USA to various warehouses and drop shippers. One can expect the highest price increases in this category. In almost all stops along the way there will be changes in pricing due to falling dollar values, increasing gas prices and increased import costs related generally to homeland security.

If you have been planning on making a purchase in this category it would be best to do so now and take advantage of current "In Country" stock levels. Price changes in this product area normally begin in mid February as companies prepare for Spring shipping. We anticipate further increases that can only be offset by retailers willing to drop their margins in order to hold price levels.

Medium sized products weighing under 10 lbs each are often shipped via air freight direct to retailers from the company's main headquarters. This year has already seen a substantial increase in International shipping costs but our guess is that manufacturers will make another adjustment in this area as well. The bigger Scandinavian and Western European Companies tend to set prices at the start of the year and express their costs in terms of "Landed Costs." What this means is that all incidental costs (customs clearance, etc) are already factored into each item and all that's left is shipping. Many companies may have lost some projected revenue this year in not being able to accurately predict all the possible cost fluctuations. We see this area as likely to show some price increases but nothing along the lines of furniture.

In addition many retailers and some warehouses already have a larger then anticipated overstock so there will be pressure to hold prices wherever possible. Not too many retailers are going to be brave enough to raise prices on current stock in the face of uncertain economic times here in the USA.

Small items and food are likely to show the least price increases. They tend to be sold to retailers in larger quantities while still retaining weight and size advantages in shipping. They are also the fastest moving store items as a rule and provide for good foot traffic through the front door. We expect very little price movement in his range of items with the exception of jewelry where the price of gold will have a significant effect and already has.

In summary you can expect some price changes but it will be the higher cost and heavier items that show the most volatility. As the consumer, your best advantage is the ability to locate items online and then manage price comparisons through email or phone contact. The additional advantage here is that you get an extra measure with which to gage the ease of dealing with any specific retailer. You should also consider that for a retailer to hold down costs, they will likely have to find even more direct ways to get your attention other then simply listing products on co-op sites such as Amazon or eBay or through pay per click advertising on the net. Don't be surprised to find very good deals on the exact products you want, buried in page 4 through 6 of search engine results. While the big players will be scratching it out for page one and two position on Google, it's the Mom & Pop Studio's who will be patiently waiting on the deeper pages for your visits.

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