For months economists and politicians debated whether the current economic conditions met the technical definition of a recession.

In the meantime, seed prices soared. Products, such as corn and mealworms, were in short supply. The cost of copper, steel and other metals used in feeders doubled. Transportation costs skyrocketed. And that’s just the cost side of the business equation.

The sales side is no better. If customers have any money left after filling the gas tank and paying the mortgage, the next priority is the soaring price of their own food. Feeding backyard birds, while enjoyable, seems secondary to many customers.

To find out just how such dramatic changes are affecting business, I contacted storeowners around the country with a long list of questions. How have you handled the tremendous increases in the cost of seed? Did you raise retail prices selectively or across the board? How did your customers react? How have customers’ buying habits changed? And, most importantly, given the current situation, what actions have you taken or do you plan to take to counteract the slowing economy?

Responses were varied and hopeful.

The best advice I received was from John, one of my own customers who operates a local gas station. He certainly qualifies as someone who has had first-hand experience with rapidly increasing prices.

"Your customers become your friends." John said. "You hate to tell friends that prices are going up, but you have to. If you don’t pass on cost increases, you will go out of business and your friends will just shop somewhere else."

Tim Clos, owner of Backyard Birds in Murrells Inlet, S.C., says his sales are flat, about the same as last year. When seed costs increased, he raised retail prices to achieve the same markup he had been receiving previously except for very price sensitive seed such as black oil sunflower seed for which he accepted a somewhat lower markup.

Clos says advertising becomes more important as the economy worsens. He has actually increased the frequency of his print advertising, though he did reduce the size of his ad. As a result, his total advertising cost remains level for more ads.

Clos anticipates a good holiday season.

"People will be tired of penny-pinching by then," he says, "and will spend for the holidays, not on unnecessary luxury goods, but on those items that bring them some comfort and sense of peace."

Another owner in the mid-Atlantic area also is focusing on the holiday season. He is planning to sell more gift items and less seed. So he has already starting looking for unique products that will generate higher profit margins than seed.

One owner in a large northwestern city divided customer reaction to higher prices into three groups. The top group contains a small number of customers who don’t even realize (or don't care) that prices have increased. The second group consists of a much large number of customers who may notice that prices are higher but say "prices are going up on everything. I can’t afford many luxuries anymore, but I love my birds."

And, of course, the truly price-sensitive group may switch to buying lower quality seed at grocery, hardware and big box stores or may stop feeding altogether. You definitely want to retain the first two groups. But there may not be anything you can do to keep the last group except to reduce prices and to accept lower margins.

When business slows, it is always tempting to cut prices to attract business, Amy Choi reports on Business Week’s Small Biz Web site. But she warns it "may temporarily boost business, but can spell trouble in the long run. It is almost always the wrong thing to do because it undermines your value proposition."

Customers get used to discounts and specials. When the economy turns, price-sensitive customers will continue to expect price deals. Your competitors’ costs are increasing. Are they cutting prices?

The economy will turn around. It always does. One experienced owner who has been through previous ups and downs takes the long view. She reminded me of the public angst when gasoline prices first topped $2 per gallon. Now that is long forgotten.

Over time people adjust to higher prices. Of course, you have to make it through the short term before you get to the long term.

Some seed vendors are employing the candy bar strategy — keep retail prices relatively level but reduce the amount of product you get for that price, like a smaller candy bar for the same price. For example, they may put 20 pounds of seed in a bag that once held 25 pounds. The retail price stays about the same, so customers are not quite as shocked.

Melody Weller, owner of Wild Bird House in Topeka, Kan., is buying more large bags of seed (50 pounds) and re-bagging into smaller sized bags (5 or 10 pounds). The margins are higher on the small size bags.

Weller also feels the rising price of gasoline may actually be helping business. People just are not driving as much. They are spending more time at home, some on so-called staycations. Those people want to enjoy their backyard more than ever.

Weller believes her regular, year-round customers understand increased prices, though she doesn’t know how seasonal customers, those for example who feed birds only in winter, may react. She plans to stress the quality of her seed, pointing out that the price of an inferior bag of seed may seem lower but that it isn’t a bargain if the bird won’t eat it.

Talking with owners confirmed some basic principles. First, the economy goes up and down, and there isn’t much that we as storeowners can do about it. Secondly, selling seed at the lowest possible prices is not a successful long-term strategy. In troubling times it is important to reflect on the true nature of our business. Focus on what you are really selling.

Let’s face it, feeding birds is not a necessity. Steve Bailey of the Garden Center Group, writing for owners of independent garden centers, had this astute observation that also applies perfectly to the birding business: "No one has ever really needed our stuff, but the relationship people have with a cool store, a nice staff and self-rewarding products never goes out of style, no matter what the rest of the business world may be experiencing."

Human beings seek pleasure. And customers derive pleasure from feeding birds. Simple pleasures seem even more important in troubling times. People buy from you because they like you and what you represent, not because you have the lowest price.

Continue to build on that relationship and customer desire to connect with the natural world.  

5 tips for staying in business
1. If you don’t pass on some cost increases, you will go out of business.
2. Cutting prices may temporarily boost business, but undermines your value in the long run.
3. Smaller, more frequent print ads can be effective while keeping spending level.
4. Sell seed in smaller bags; the margins are higher.
5. Customers who drive less may spend more time as backyard birders.