In fairness most prices increased by the 2.5% VAT increase here in the UK and not really much more than that (which is fine), some have even gone down (would you believe!), but there are some that really have rocketed. These fibres are the imported ones mostly, like Merino and Silk. Part of the cost increase is due to weather and general animal and plant farming increases and effects, and part is due to the massive rise in airfare costs (Ashford equipment suffers here also).
Blue Faced Leicester (BFL) is another product hit by the rise... but is a UK breed, which is odd as other UK breeds have mostly maintained the regular annual increase... I find it difficult to believe that one breed has been effected solely by the weather, or farming increases. Although having said this I do know that not all farmers sold their fleeces last year, as they couldn't get the market prices needed... this led to more burning fleece... such a waste! I want to scream, 'Here I am. I want your fleeces!' With this in mind the large rise in prices can only be explained away by increasing demand v.s stock. BFL is a notoriously hard sheep to breed, despite it being such a wonderful fleece. Grading fibres from BFL sheep can also be difficult as they are often used for cross breeding, so most fleeces can sell as a 'general wool' grade. This is fine for yarn manufacturers, as it has a lower cost, but the luxury wool label. It does however, make it more difficult to get hold of 'more pure' tops, fleeces and rovings for the handcraft business.
I'm flooded with dread to be honest... some of my most popular products are the high rising ones, which I guess is a mirror of the industry as a whole. So there are two things that can happen from here on in;
- People continue to buy (maybe less each time) and accept that prices have increased.
- People stop buying those products either vastly, or all together.
My plan for the shop this year is;
- Set these new prices with margin decreases where possible, so that the hit of the price rise is not all passed onto the customer. It means I'll have to sell more to make as much income (I'm still on a part time wage, which is worrying).
- Continue to work with existing suppliers to see if larger ordering patterns will differentiate my cost prices... and see what I can pass on to the customer. Splitting this equally will increase their saving and my margin loss.
- Try to source new supply routes.
- Rethink some of my lines. Some of the slower ones could be removed, cutting running costs to try and recoup margin and sale losses.
- Work with customers to educate and revive other breeds of wool. Maybe there are lesser known/used alternatives to BFL?
- Re-look at my plan of new product lines for 2011. Maybe my 2010 ideas need changing?
I hope to update you soon with initial changes...
P.S. Wow, I almost sound business-like!