The biggest question/concern for vendors and retailers in 2019: How will tariffs affect business operations in pricing, flow of goods, and quality. In talking with vendors and reps across the country, it seems that retailers are in one of two camps:
1. Accepting that the tariffs are in place and the retail prices for Chinese manufactured goods will be adjusted accordingly
2. Eliminating the Chinese based resources in their stores
As reps we try to find the best quality product at the best price that will sell in volume. Historically we have been agnostic to where the goods are produced—focusing only on the overall value of the product. For case goods, we are seeing high quality product coming from Mexico, Vietnam and Indonesia. The only concern with the latter two is the logistics; the time to manufacture and ship to the states is noticeably longer than similar goods that are (were) sourced from China. There is only so much capacity and prices from factories in these counties is definitely going up due to increased demand.
The hottest and fastest growing category in the industry is power motion. There is some power motion manufactured domestically (with Chinese parts); however, for the best overall value we are hearing and seeing (in reorders from the power motion company that we work with) that the best place in the world to source power motion is China. Even with the tariffs factored, the net cost of goods is much sharper and the product is a better product than competitive products sourced elsewhere.
One rep told me a retailer adjusted his retail prices on a power motion group by several hundred dollars and the sale rate was unaffected.
The takeaway from my perspective is this: The tariff circumstance does not affect the quality or sale through rate; it does affect the retail prices. Ultimately people still want to buy great products and the best overall value.
Probably the most important thing as the disruption happens is to align yourself with resources that can get you goods when you need them. We believe the factories we represent will not let you down.
