Thursday, November 6, 2008
When Mark Swanson flew to New York City to negotiate with European vendors for his clothing and accessory business, he couldn’t buy half of what he had the previous year.
“It was cool stuff, but it was way too expensive,” Swanson said.
Since the value of the U.S. dollar has decreased, the cost of importing goods has increased. This has affected many local businesses that import products, such as Swanson’s store, Hobbs. Swanson said that he imported 60 to 70 percent of his inventory, and that the price of European products have increased by about 30 percent in the past year.
“There’s no way we’re buying like we did,” he said.
Geri Riekhof, owner of the kitchen accessory store The Bay Leaf, said she, too, had to cut back on her foreign imports. She said the economic climate had prevented her from stocking her store with more ornate pieces, such as Italian ceramics.
Riekhof’s brother, an importer in Chicago, helps her buy directly from the manufacturer instead of relying on a wholesale distributor. Even with this advantage, though, Riekhof said importing was still too expensive.
She said she believed customers wouldn’t pay for the more expensive products in a struggling economy. That means customers have fewer choices and less competition among businesses to lower prices.
Riekhof said she looked for products made in America and Canada first because the price of imports had risen. She said it helped her make the most of her money.
One Lawrence business significantly affected by import prices is the European food market Au Marché, owned by Lora Wiley. Wiley said 99 percent of what Au Marché sold was imported.
“I can’t keep the prices we had a year ago and pay our bills,” she said. “This could be a long run. I don’t know when this economic crisis will end.”
She said she had reservations about raising prices and pinching customers’ wallets, but said she was more worried about the future of her business. Prices have gone up for Wiley across the board, and she has had to raise her mark-up.
Regular customers at Au Marché are feeling the crunch.
“I come in every month or so just to look at prices,” Jessie Johnson, Lawrence resident and Au Marché customer, said. “I’ve been buying less foreign stuff because it’s so expensive. You have to be choosy now and think, ‘Do I really need this?’”
Johnson said price had been her primary concern when making purchases.
John Keating, associate professor of economics, said people would continue to buy imported goods as long as they had the money because there weren’t many alternatives in the market.
Keating said the dollar could rise because of signs that the economy was turning around, such as Warren Buffett’s $5 billion stake of Goldman Sachs. This would strengthen the dollar and make imported goods more affordable.
Keating also said having a wholesale distributor, or middleman who can absorb price changes, could help keep prices of imported goods from fluctuating. Research suggests that the closer a purchase is to the original manufacturer, the more turbulent the price will be, Keating said.
Wiley uses a distributor to get her imported goods and agreed with Keating that it was better to have a middleman in the mix.
— - Edited by Jennifer Torline
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