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A Number Of US Retailers Warn: Trade Disputes Will Make The Price Increase In The Christmas Season Inevitable
- Sep 30, 2018 -

The opening of the US tariff gate has gradually shown its impact on economic life. The retail industry, which has the closest contact with consumers, seems to be immune to it.


Recently, US retailers have also fallen into a dilemma, and have warned that the upcoming Christmas-New Year holiday at the end of the year may face rising prices, and the increased cost is likely to be borne by ordinary consumers.


Last week, US retail giant Wal-Mart also sent a letter to the US Trade Representative Office, warning that the intention to increase import tariffs will soon lead to rising retail prices.


Wal-Mart said in the letter that the new $200 billion tariff will increase consumer prices and become taxed relative to US companies and manufacturers. “As the largest retailer and major buyer of manufactured goods in the United States, we are very concerned about the impact these tariffs have on our business, our customers, our suppliers and the entire US economy.”


Brian Cornell, chief executive of retail venture Target, said that before the end of the year, low-margin consumer price increases are inevitable. He expressed concern about the large-scale tariffs imposed by the United States, saying that it would increase the price of daily household items in the United States, and expressed concern that the long-term deterioration of global trade relations may harm the economic growth and vitality of the United States.


Neil Saunders, retail research manager at data research firm GlobalData, told retail retail website Retail Dive that because tariffs may compress profit margins, retailers may be forced to swallow the cost of tariffs or pass them on at important festivals. To the consumer. He thinks this is a dilemma, which will depend on different retailers, but both approaches may be adopted.


Saunders said tariffs are particularly dangerous for retailers in the late economic cycle as it may exacerbate the impact of other rising costs, including technology spending, logistics costs, rising gasoline prices and rising labor costs. In short, the addition of tariffs is the most unwilling to see in the retail industry.


In the latest tax collection list in the United States, a variety of goods and consumer goods from clothing to electrical appliances are ranked among them. The Retail Dive website said that some retailers are working with suppliers to study how to deal with the impact of tariffs, while some retailers want to transfer their manufacturing base. However, supply chain adjustments take time and costs are high, and some SMEs may face financial difficulties.


Best Buy CEO Hubert Joly said in an investor conference call last month that Best Buy is negotiating with suppliers and trying to diversify its supply base, but he also said without a word: "This is a complex task. ."


For the rest of the year, US retailers will face a 10% tariff, and by January 1 next year, tariffs will rise to 25%. Saunders warned that if retailers could not reach an agreement as soon as possible, US retailers could face even more bleak prospects in 2019.


Before the Christmas holiday every year, it is the most important shopping season in the United States and Western countries. For some retailers, the Christmas holiday contribution to total revenue may be as high as 30% of the year.


According to MasterCard SpendingPulse, which tracks all online and in-store consumption by MasterCard, during the shopping season from November 1 to December 24, 2017, car-free holiday retail sales are expected to increase 4.9% year-on-year, tracking the data for MasterCard in 2011. The highest growth rate since.


MasterCard reported in the report that due to rising consumer confidence, rising employment rates and early discounts for retailers, US consumer spending totaled over US$800 billion before the 2017 holiday, setting a historical record.