Tariffize

Tariffize: Adapting Your Business to a Policy of Trump Tariffs

The potential increased tariffs proposed by President-elect Donald Trump has retailers and wholesalers asking questions about the impact on demand that would result from another round of price increases. Most retailers were grateful going into 2025 that wholesale prices remained flat against 2024 and in some cases had decreased as shipping costs were reduced and those savings were passed on. If tariffs do increase, the cost of those tariffs will be paid by importers as goods are received, and those additional costs will be passed on to retailers and then from retailers to the end consumer. Proposed tariffs from China could be as high as 60%, up from around 20 to 25% now depending on the product. 10 to 20% tariffs are also proposed on imports from other countries. The uncertainty comes from the speculation whether all products will be subject to higher tariffs, or will they be targeted? Is this a negotiating tactic, and will some settlement come into play? Or will the potential inflationary impact of higher tariffs result in a more moderate approach? Ken Bankson, Management One Retail Expert and head of the Bankson Group, and I were discussing this, and he remarked retailers and wholesalers need to continue to focus on controlling the controllables. I agree and think that creates a pathway for a clear strategy that you can implement now. Here are my thoughts on how to navigate through the next period.

Focus on Your Selling Metrics

The number one focus is to raise your average sales per transaction/customer. The reason is that if prices increase, your staff will be focused on sustaining the higher transaction amount per customer. If you are at $100 per average sale per customer and can raise it to $120 or higher per average sale, then you will absorb any increases in prices. As we go on holiday, there may be an extra attempt to move new customers into returning clients. A larger client base is insurance against higher prices as you have a larger pool to attract business.

Pay Attention to Your Assortments

Over assorting becomes an even greater risk. Buy in depth and be meaningful to the vendors that represent your greatest ROI. Less vendors allow you to be meaningful to a select group and provide an opportunity to negotiate and potentially negotiate better savings. Look for other opportunities with domestic vendors or build other categories that provide higher margins, allowing you to sustain your margins. Where possible, look to go upscale as higher-earning customers will not have the same price sensitivity.

Maintain Your Initial Markups

Do not be fooled that taking a shorter markup will sustain or increase demand. These increases will be across the board and impact on all your competitors. Initial markup is a strategy that is critical in managing your margins to be profitable. Tampering with them can undermine your overall productivity. Do the math and, as new goods land, change your pricing to reflect new pricing. It will give you an insight into the capacity of your customers’ tolerance for higher prices. Every sale at new prices also provides a future cushion for potential markdowns.

Change the Flow of Goods

Be aggressive about getting out of fall and holiday earlier than you have in the past. Deliver resort and early spring the first two weeks of January. If you land goods late in December, be thoughtful of receiving them as they will increase your inventory and create a tax consequence. Your marketing and presentation should reflect this change.

Research

The De minimis Rule allows for imports to come into the United States duty-free and will have less scrutiny. It is a loophole, and one that companies like Shein and Temu exploited. This will depend on whether this rule will survive. Check with your vendors, especially key vendors, and discover what they are doing and their expected actions. Spend time on marketplaces like Faire to explore new vendors and classifications. There is reduced risk, and new orders have a return policy. All change is good and even the ones we fear offer an opportunity. We can decide to let events decide our outcomes or we can take control. For those of you who know me, it is always about playing offense. These ideas are about you taking the field and not letting the situation back you into a corner. Onwards and Upwards, Marc

Embracing Change as Opportunity

Every challenge holds the seed of opportunity. Increased tariffs may pressure businesses, but they also compel innovation, adaptability, and strategic refinement. By focusing on controllable aspects, such as pricing strategies, product assortments, and vendor relationships, you can transform adversity into growth.

Checklist for Retailers Navigating Tariff Changes

• • Increase average sales per transaction by upselling and cross-selling.
  • Convert one-time customers into repeat clients to expand the customer base.
  • Focus on buying depth rather than breadth; prioritize key vendors.
  • Explore domestic suppliers to diversify product offerings with higher margins.
  • Maintain initial markups to safeguard profit margins.
  • Early transition of seasonal merchandise to maintain customer interest.
  • Stay informed about vendor strategies and adapt collaboratively.
  • Explore new supply avenues via marketplaces like Faire.

Conclusion

The shifting tariff landscape requires vigilance, adaptability, and proactive planning. By focusing on core strategies like customer engagement, assortment optimization, and maintaining profitability, you can stay ahead of the curve. Change may be inevitable, but by taking control of your response, you ensure your business emerges stronger, no matter the external challenges.