HOW WILL THE EMERGING TRADE WAR WITH CHINA AFFECT RETAILERS?
Q: I have a few menswear stores on the East Coast. How will the emerging trade war with China affect our suppliers, and eventually, our customers?
Steve Pruitt: So far there has been no word of tariffs on clothing. So, we don’t expect a direct effect now, but I think we’re all wondering what might come next.
Trade barriers often mean delays and price increases, which can lead to inflation. Trade issues can also lead to shortages, which is worrying since China is currently making products for most segments of the U.S. market.
It can be argued that rising prices can be good for business. As long as the consumer continues to buy the same number of units, rising prices can mean higher sales.
Meanwhile, low prices, coupled with an oversupply of merchandise, have led to high levels of discounting just to move all the product. This has hurt profitable sales.
Let’s hope the situation does not get out of hand, but a little re-balancing of supply may be okay.
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