Retail Holiday Newsletter
While uncertainty looms over recently enacted and scheduled US tariffs, retailers and consumers could still experience some negative effects of the US-China trade war as they deck the halls. In a recent Bain & Company survey of nearly 100 US retail executives, more than 85% of respondents anticipate increases in their cost of goods sold from tariffs this holiday season. On average, retailers are expecting a cost increase of 4%, along with a 2% volume contraction. Historically, when producers face increasing supply costs, consumers bear most of the burden. The on-again, off-again tariffs on Chinese goods are no exception—a majority of retailers aim to pass at least some of these costs on to consumers via higher sticker prices. If they don’t take additional actions to offset the costs, however, Bain estimates that retailers may ultimately face up to 400 basis points in gross margin contraction this holiday season.
Suzanne Tager is a senior director with Bain & Company’s Global Retail practice, and she is based in the firm’s New York office. Darrell Rigby leads Bain’s Global Innovation practice, and he is based in the Boston office. Aaron Cheris leads the firm’s Retail practice in the Americas, and he is based in San Francisco.