Sometimes the economy’s weight feels like it is piling onto the heavy load most independent businesses already carry. Economic slowdowns, high interest rates, and rising inflation pose serious challenges for hardware stores. Yet how owners address the issues threatening their store’s profitability can determine future growth. Take the necessary steps promptly to prevent a downward spiral that can take years to reverse. Think of the challenges your business faces as an opportunity to learn new strategies that will ultimately improve your store’s operations.

According to the National Federation of Independent Business (NFIB), inflation is one of small business owners’ primary concerns. One in four surveyed said it is the most important problem they face. Rising product costs trickle down and change everyone’s buying habits, especially consumers. They become more selective, while hardware store owners struggle to manage expenses and deliver value.

Focus on Cash Flow
Retail experts often say cash flow matters more than gross sales during difficult economic times. Avoid tying up thousands of dollars in slow-moving inventory. Review inventory reports monthly to identify items that haven’t sold in 90-180 days. Develop a plan to reduce excess inventory and free up capital for more effective use elsewhere in the business. Consider discounting the merchandise, bundling it with related products, or, if possible, returning it to the supplier. However, keep high-demand products in stock, especially those shoppers require for maintenance and repair. These items typically sell well because people are fixing, not replacing, the fixtures in their homes.

Save on Gas and Transportation
Hardware store owners with multiple locations or delivery services are reeling from high fuel costs. Twenty-five percent of the business owners surveyed by the NFIB cite fuel and energy costs as a critical concern. While federal and local governments primarily control gas prices, owners can take practical steps to reduce transportation expenses. Transportation experts recommend:

• Use routing software to optimize delivery routes.
• Combine deliveries based on geographic areas
• Schedule supplier pickups and deliveries to minimize trips
• Maintain proper tire pressure and prioritize vehicle maintenance
• Limit vehicle idling

Know When to Raise Prices

While consumers feel it’s never a good time to raise prices, owners recognize that factors beyond their control can drive price increases. Rather than implementing significant across-the-board increases, raise prices selectively to avoid sticker shock. Customers are more willing to accept price changes on specialty products, emergency repair items, and convenience products. Experts recommend focusing on margin dollars rather than unit volume. Selling slightly fewer products at healthier margins can often improve profitability.

Rather than avoiding the pricing issue, communicate with customers by explaining the change. Shoppers know gas prices are rising and understand that modest price increases are part of doing business. Owners should post a notice to explain that supplier or transportation costs have increased.

Pivot to Recession-resistant Categories
People think longer and harder about what they buy when times get tough. Although they may forgo major home renovations, they keep spending on maintenance, repair, and energy-saving products. Homeowners find it more cost-effective to fix a leaky faucet than to build a deck that costs thousands of dollars. Analysts suggest independent hardware stores can thrive as construction slows by shifting inventory to recession-resistant categories.

• Plumbing repair products
• Electrical repair supplies
• Weatherproofing materials
• Energy-efficient lighting
• Lawn and garden maintenance products
• Safety and security items

Plan to Move Forward
Running a successful business requires owners to stay flexible and willing to adapt to new situations. Owners can’t control inflation, gas prices, or higher material costs, but they can develop a strategy to address each situation. Constantly monitoring factors beyond your control may be uncomfortable, but don’t treat them as a crisis. Look at these obstacles as an opportunity to adapt and outperform competitors.