As you prepare for 2023’s busy season, some big questions are what inflation will look like this year and if the supply chain has finally worked out its kinks.
Currently, it’s looking like a mixed bag. While material costs will still have inflationary pricing, suppliers aren’t expecting them to be as drastic as some of the price increases in the past few years. Meanwhile, supply chain issues are expected to be much less of a headache.
“We’re actually in a good place with our vendors,” says Rob Mizelle, head of product for Gemplers. “We’re not anticipating anything like last year, where there were some inventory issues.”
Predicted Price Increases
The annual inflation rate for the United States is 6.5 percent for the 12 months ended December 2022 after rising to 7.1 percent in the previous period, according to U.S. Labor Department data published Jan. 12. Mizelle says they don’t expect any large price increases for 2023.
Steve Counter, vice president of category management for SiteOne Landscape Supply, says some specific products could potentially have higher price increases than others. He says this is due to labor rates, labor constraints, raw material costs and freight costs.
“Although the volume and size of increases we receive from suppliers has slowed, there are still large parts of the business where we expect to see continued price inflation through 2023,” Counter says. “For example, certain suppliers have already communicated increases for 2023 for irrigation and lighting products.”
Counter says he doesn’t anticipate the inflation rate to return to historic levels of low single digits annually until late 2023. From a budgeting standpoint, Mizelle suggests planning for 2 to 5 percent inflation increases.
“We advise our customers to plan supply needs as far in advance as possible and limit project quote windows to 15-30 days while we remain in this unprecedented and dynamic period,” Counter says.
Supply Chain Improvements
While inflation might take some time to ease, reduced supply chain disruptions have been notable.
“We’re optimistic; there’s marked improvement within the supply chain,” Mizelle says. “Production has opened back up in various different places. It’s not as restricted as it was. Things are getting back in line with demand. I don’t think it’s going to be pre-pandemic level, but it’s getting back to more of a normal state.”
Carl Atwell, president of Gemplers, says while replenishment timelines aren’t all the way back to normal, they have greatly improved. He says, in general, they have worked on forecasting with their vendors more so they know the quantities Gemplers plans to order over a certain period of time.
Counter says SiteOne has worked hard to ensure they have the right mix of available products and inventory. He expects there may be some shortage issues with products that use electronic components.
“There may be some controllers and other electronic products which use integrated chips where supply might remain a challenge,” Counter says. “We are working with our supplier partners to improve our inventory position as much as possible to reduce this risk, but there may be some cases of this type of inventory being in short supply.”
He encourages landscape professionals to plan supply needs in advance as far as possible and work with their local SiteOne locations for their specific needs.
“We will do everything possible to secure their needs and the teams can help identify alternative product recommendations if need be,” Counter says.