Michael Froumy, owner of Fro Me A Party in Egg Harbor Township, sells 600,000 to 1 million balloons a year, needing 27 tanks of helium per month to meet the demand for graduation parties, birthday bashes and proms.
But now, not only is helium costing him more, he is also dealing with distributors rationing helium tanks.
“They’re rationing everything to how many tanks you have in your store,” he said.
Businesses have to adapt to supply shortages by charging more, shuffling costs or altering operations to keep customers and remain profitable.
Right now, businesses are dealing with the scarcity of helium, the growing cost of flounder and the volatility of sunflower seed prices.
Various shortages, such as the one currently affecting the balloon industry, illustrate the balancing acts required when retailers find their raw materials scarcer, unavailable or more expensive for a period.
Froumy said he now needs two suppliers to get his helium. He also raised prices in June by 10 cents, to 85 cents for a latex balloon, to offset the higher price of helium and to help balance the demand. The national shortage also prompted him to stop renting out helium tanks for parties because he can’t spare them.
“We do what we have to do,” he said. “We’re in the business of parties. Balloons are a big part of our business, and we need helium.”
Rob Deuel, owner of K&D Dollar Plus in the Marmora section of Upper Township, faces similar pressures from the helium shortage.
With high school and college graduations, this is a big time for the balloon business, and Deuel said his suppliers told him helium prices will be rising, although as of yet he has not had trouble keeping the gas in stock for balloon orders.
In most cases of supply and demand, local retailers are far removed from the sources that act on the markets.
In the balloon industry’s case, it’s the federal Helium Privatization Act of 1996, which required the Bureau of Land Management to sell most of its crude helium stockpile by 2015. This, along with supply shortages on international markets, helped create a volatile market in recent years, a bureau official told a U.S. Senate committee in May.
Marty Fish, executive director of the Wichita, Kan.-based International Balloon Association, said the domestic helium market enjoyed low prices for years due to the country’s major helium reserves. While prices are now rising to meet demand, she expects international helium production to ramp up.
“Eventually the market will have plenty of helium again. At what price? Hopefully a price that’s reasonable and in line with the market rate,” she said. “The balloon industry will adjust and continue to exist. Right now, we’re at a bump in the road because supply is low.”
Many markets are affected by oil prices, when rising prices trickle down from manufacturers to distributors to retailers, sometimes via fuel surcharges tacked on to invoices.
“When oil was shooting up, that affected anything that had plastic material, right down to plastic lawn edgings. Even in petroleum-based artificial Christmas trees,” said Gail Goodman, general manager of Bob’s Garden Center in Egg Harbor Township.
Even materials sold as commodities — such as sunflower seeds, a component of bird food — tend to fluctuate based on production.
“We do see bird seed prices on an increase. To kind of soften the blow, we’ve reduced our margins to try to hold the price down for the consumers,” Goodman said. “It does happen with more than bird seed. A few years back, when copper went through the roof with the pricing, most of the items that had copper, like light sets, increased in price.”
Dealing with these external factors requires balancing, passing along some of the cost but not so much as to scare away customers.
“You have to run your business a little smarter and try to tighten your belt where you can to try to absorb some of that price increase,” Goodman said.
At Barbera Seafood in Atlantic City, prices fluctuate often based on catches and fishing restrictions on various species.
Owner Dominic Alcaro, who took over the long-running seafood market in 1986, said what he pays has increased rapidly recently due to catch restrictions that drove up the market value of the fish.
Instead of just substantially boosting the $8.99 a pound he charges for fluke, Alcaro said, he tempers the increase by slightly raising prices of other fish.
“Rather than raising the price of fluke, I might raise something across the board,” he said. “People understand things do go up, and others have a hard time accepting the price of fish going up so high. So rather than seeing people upset, I try to keep it the same price as much as possible.”
“All seafood fluctuates because of closings and openings,” said Alcaro. “Supply and demand. If the supply is not there, the price is going to go sky high.”
At Fro Me A Party, Froumy said there are options for filling balloons besides helium, including regular air for balloon decorations.
But filling balloons with regular air takes employees longer, he said. And helium-filled balloons do not have to be shuffled around on the floor to make room for others since helium balloons tend to store themselves.
“Helium makes it easy to work with because it’s out of your way — it floats,” he said.
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