The Indie Retailer’s Response to Tariffs
By Marc Weiss, Co-founder, Management One
Based on what we know today, the first step is mobilization and preparation. This allows you to take action now to prepare for future uncertainty. Creating a contingency plan with trigger points for execution is one way to approach this concept. The benefit of preparation is that, as events unfold, you are freed to respond thoughtfully rather than react to them.
Here are my recommendations on important actions to take as part of an effective response.
Know your cash position and take steps to remain liquid.
It is reasonable to think that the inventory you own today will cost you another 10 to 140% to replace, depending on where the goods are being sourced. So the question of why I should take a markdown is a fair question. The short answer is a dud is a dud and you may need the cash for a better opportunity.
Acquire a line of credit as soon as possible. While I'm usually strict about borrowing, a line of credit is inexpensive if unused and offers both insurance against future uncertainty and the liquidity to act on the right opportunity.
As you know, it is easier to get a loan when you don’t need it, than when you do.
Utilize the Management One cash-flow template to create a cash flow projection through the end of the year. Maintain an ongoing 12-week cash flow projection.
Vendor relationships
Ascertain which merchandise originates from China and calculate the percentage of your on-order items that will be affected. Begin the search for alternative sources immediately.
Contact all vendors to determine if they will accept goods with tariffs and if they will maintain the original prices on your purchase orders.
Container prices are rising again due to capacity constraints, and the 90-day hold on reciprocal tariffs has accelerated shipments. It is anticipated that vendors will attempt to recover costs through price increases in Spring 2026, assuming global markets stabilize. You should expect some freight increases, even if vendors maintain their prices.
Allocate time to communicate and find alternative sources. Plan on spending additional time at markets.
Trim the excess, by cancelling fringe products.
Prioritize key classifications by running your purchase orders by class and vendor.
Ensure a heightened level of investment in the right assortments.
Expect brisk business over the next 6 to 8 weeks
Consumer traffic in stores is increasing, potentially due to customers buying now to avoid future price increases.
Retailers should proactively collect customer contact information (name, address, email, phone number) to build relationships and foster a sense of community, especially with new customers.
Retailers should consider offering bounce-back promotions to encourage future purchases.
In June, a webinar will feature a client who has excelled at building community and a loyal customer base.
Be prepared to make swift decisions.
Management One has invested in POS integrations that provide daily results, enabling you to make decisions based on current trends.
M1 will release new dashboards to expedite decision-making in addition to current reporting.
Stay in communication with your retail expert and feel free to contact M1 planning to update them on any important changes to your business.
When developing your contingency plan, be transparent with your vendors, customers, and employees, and engage your team for their feedback.
I learned a valuable lesson from a Navy Seal that I often spoke about when Covid-19 surprised us all. In battle, you have three choices: freeze, flee, or fight. I've always chosen to fight. Taking decisive action now will set the tone and direction for your continued progress, and lift your spirits to keep moving forward.
Onwards and Upwards,
Marc Weiss