Retail Suppliers ‘Completely Under the Gun’ Amid Tariff Pressure
Retailers are seeking discounts from suppliers and raising prices on goods amid America’s tariff efforts.
As The Wall Street Journal (WSJ) reported Sunday (March 16), a lot of this activity has thus far centered on products from China, the subject of two rounds of 10% tariffs by the White House.
According to that report, some suppliers say retailers like Walmart and Home Depot have begun making a similar demand: bring down prices or move production out of China, leading to some tense negotiations.
“Companies are completely under the gun and panicking,” Joe Jurken, founder of The ABC Group in Milwaukee, told WSJ.
He said his company, which helps American businesses manage supply chains in Asia, has received a wave of inquiries from manufacturers being pressured by retailers to shift production out of China.
The report noted that some of these requests have not sat well with officials in China, where the government recently summoned Walmart to address complaints that the retailer was pressuring suppliers to reduce prices and absorb the tariff cost.
Walmart said it was in talks with suppliers to help its shoppers save money and that it would continue to work with them “to find the best way forward during these uncertain times.”
However, the WSJ report added, some pricing discussions have reached impasses as many manufactures are already operating on thin margins, while retailers don’t want to hike the prices they charge consumers.
And as PYMNTS wrote last week, Walmart is already facing pressure as its consumers prioritize essential purchases over discretionary spending.
“There are lots of income levels in this country — if you’re at the lower end of that scale, you are feeling more frustration and pain because of higher food prices,” CEO Doug McMillon said during a speech before the Economic Club of Chicago earlier this month. They’ve persisted for years now, and you’re just tired of it.”
McMillon also noted that budget-conscious consumers are purchasing smaller pack sizes and taking a more selective approach to their purchases. This has ushered in a “perfect storm” for merchants, as noted in a separate report here last week.
“Their own costs are rising, their ability to pass those costs along (in the form of higher prices) will be truncated, and gauging customer demand will be difficult at best and impossible at worst,” PYMNTS wrote. “Through it all, the consumer pullback looks likely to widen beyond booking trips or shopping at big-box retailers.”
The post Retail Suppliers ‘Completely Under the Gun’ Amid Tariff Pressure appeared first on PYMNTS.com.