Small businesses in Montreal say rising oil prices linked to the war in Iran are starting to hit their bottom line.
Among them is Jardin Chez Michel in the Jean-Talon Market, whose co-owner says higher costs are forcing them to rethink how they operate to avoid passing the bill onto their customers.
“The machinery, it takes diesel. When we deliver flowers over here, it takes either diesel or gas. When we heat the greenhouses, it’s oil, fuel,” said Luigi Bono.
Plants, flowers, fertilizer and seeds – all getting more expensive as fuel prices rise.
“Everything has increased by at least 20-25 per cent this year,” Bono said.
READ: Gas prices climb above $2 per litre again in parts of Montreal
But as costs go up, prices at Jardin Chez Michel stay the same. “We take the hit, in a certain way,” Bono explained.
Because of how quickly oil prices can spike, Bono says supplier prices can fluctuate from day to day. And with competition from big-box retailers, he says simply raising prices isn’t an option.
“We’re competing against giants, Costco, Walmart,” he said.
“We used to afford to deliver it for $10, $15, but now with the price of gas increasing, we’re losing too much money if we do that.”
Economists say many businesses are now weighing whether it’s cheaper to absorb rising costs, or risk losing customers by raising prices.
“They’re making the same calculation as every other business, so whether we’re talking about Walmart or a local mom-and-pop shop,” said economist Moshe Lander.
But Lander specifies smaller businesses often have less room to maneuver when costs suddenly spike.
“Small businesses probably because they’re operating on those wafer-thin margins to begin with have a smaller timeframe than the Walmarts of the world,” he said.
The Montreal flower shop isn’t alone. It’s also the case for agricultural company Lufa Farms.
“We have a few instances for, again, the few imported products where we do have some fuel surcharges. For now, we are absorbing that cost,” said Lionel Trombert, the vice-president of finance at Lufa Farms.
The company says it’s been able to soften some of the impact through methods that don’t rely on oil and gas, like using hydroponics instead of soil to grow their crops.
Also, more than half of the company’s orders are delivered by electric vehicles.
“We have about 65 per cent of all orders delivered by EV,” Trombert told CityNews.
For smaller businesses like Jardin Chez Michel, there’s no easy workaround. Bono says the store will keep adapting as long as it can, but he says even that remains difficult amid a cost of living crisis.
“The normal people, they’re struggling,” he said. “They want to encourage us, but they also want to save money.”
