From initial fears of a prolonged economic slump due to COVID-19, the global economy has seen a resurgence led by unprecedented demand. To experience such strong activity following months of lock-down where key industries cut back on activity to reduce costs, a backlog has been created that may take global supply chains years to catch-up. Coupled with skill shortages across all industries, the past 12 months have seen inflationary pressures reach a new high for the 21st century.

Faced with increasing input costs, businesses have had little choice but to pass these costs on to consumers. Price increases are however an uncomfortable conversation in all business settings. Moreover, with the power of social media, consumers can have more of a say on price surges than ever before. Hence, the reaction of consumers and the impact on business reputation can have long term consequences if changes are not communicated clearly.

Considering the consumer reaction to price rises, businesses must evaluate how the long-term impact on customer relationships will be managed. An open dialogue explaining the reason why prices are increasing will more likely assist with a consumer associating themselves strongly with the business and made to feel an integral part of its success. In a volatile market, poor communication poses the greatest risk to a customer switching to a competitor.

Although the current environment is challenging, investment into technology and new skills is more crucial than ever. Businesses that can innovate and increase the value proposition are in turn more likely to establish a customer base which will not get deterred by price, and instead focus on the value being delivered.