Vivian Hoffman has worked in retail stores for 25 years as a 21st century buyer for half a century, including the last eight running Whims. She adapted to the recession, chaos and the Covid-19 pandemic after the attack on September 11, 2001.
However, the past few weeks have also presented a series of challenges that have been disrupted for industry veterans.
Most of the clothing and accessories Hoffman sells are produced in China and so far faces 145% import operations, potentially facing high tariffs in a few months. Her vendors pay customs duties, one of them recently raised the price of their shoes by 20%, while others say they will soon increase their prices to offset the higher costs. Vendors selling Chinese-made jeans couldn't even understand the price of putting items on the fall line.
The turbulence, along with the shaking consumer demand, has detained Hoffman.
“I was going back and forth. I think the business is going to get hurt, so do you buy less, or do you try to buy extra items because you're afraid of price increases?” she said. “I've been going back and forth between the extremes.”
With five stores and a small online presence, Whim is nothing more than a speck of the vast retail universe. But the prickly decision that Hoffman faces is a microcosm of the whiplash faced by retailers across the United States. While all businesses long for clarity, the broad tariffs imposed, threatened and drawn back by the White House make it difficult for businesses of all sizes and shapes to plan ahead.
Large retailers, such as Walmart, Target, and giant e-commerce operators like Amazon, have the power to demand concessions from overseas suppliers. Amazon CEO Andy Jassy said in an interview on CNBC on Thursday that the company will accelerate its bringing inventory to the US ahead of tariffs and attempt to “renegotiate terms” with some suppliers.
However, most retailers are small, independent companies that often fall on vendor mercy. And like apparel, in many industries, most of what they sell is produced in China and other countries, and there are few options available in the US.
Alyssa Chambers, who owns Nova Essence IO, which makes scented candles, said the price of a 12-pack Chinese-made glass candle jar jumped to $25 from $21 last year. But similar bottles produced in the US cost at least twice as much, she said. Even before this week's event, the costs of wax and wicks she also ordered from China have also risen.
“Now, I don't want to affect my customers, so I'm eating the extra costs of supplies,” said Chambers, who works for herself, sells products online and sells products at pop-up shops, shows and events. “I'm just taking my time to sacrifice and not respond emotionally.”
The start and stop nature of tariff development has shook the stock market as people lurked, weakening consumer trust. Retail sales increased 0.2% in February compared to January, but were spent on clothing, accessories, electronics, restaurants and bars.
The University of Michigan Consumer Sentiment Index fell 11% in March, the third consecutive monthly decline in March since November 2022, dropping to its lowest level. According to RetrentPro, which recently surveyed consumers about products they recall, it could convince consumers to buy second hand apparel or other items. Nearly 85% said they were worried that tariffs would raise prices.
“We're looking forward to seeing you in the future,” said David Silverman, senior director of Fitch Rating's corporate group. This week it said it had downgraded its rating to “deterioration” from “neutral” in the US retaliation and consumer product sector.
According to Bloomberg economist Anna Wong, the latest increase in tariffs in China is likely to disproportionately hurt consumer goods.
Last year, according to the Peterson Institute of International Economics, three-quarters of all toys and sports goods, 40% of all footwear, and 25% of all textiles and clothing imported to the US came from China.
For months, many companies have tried to adjust their business plans in anticipation of tariffs, but successes vary. Shoemaker Steve Madden said in February that he reduced the share of goods imported from China from 71 to 58 since November. The company hopes to reduce that number to the low range of people in their 40s in the coming months.
“We selectively raise prices,” Edward Rosenfeld, the company's CEO, told investors in February. “We'll do that from autumn where we think we can get a little more for the product.”
At this week's investor meeting, Walmart, the country's largest retailer, predicted that its first quarter sales would increase by 3-4%. However, tariffs make it difficult to predict operating income growth, as a third of what Walmart sells comes from around the world, particularly China and Mexico.
“We're in this new customs environment for a week and we're still working through what this means to us,” said John David Rainey, Walmart's Chief Financial Officer. “In the current quarter, the uncertainty and declining consumer sentiment has led to a little more volatility in sales each week and frankly, daily.”
Since the tariffs were first announced, Amazon has cancelled orders for certain items, including skateboards purchased from suppliers through special programs.
Under the special program, the vendors sold the product to Amazon at a lower price, but Amazon paid to move the product to the US and was on the hook to directly cover customs costs. When that tariff risk changed, Amazon effectively pushed back more costs back to suppliers by cancelling orders. Now the supplier will have to import the product themselves, pay the duties and then try to renegotiate the higher wholesale price on Amazon.
Amazon declined to comment on cancelled orders previously reported by Bloomberg.
Craft retailer Hobby Lobby told vendors that it had not cancelled the order, but delayed shipments from China, due to the escalation of the trade war and “a fast-changing, unpredictable landscape,” according to a news report viewed by the New York Times. It said they would review their plans every week. There were no immediate comments in the Hobby Lobby.
Smaller retailers, no matter how ready they are, have no Amazon's muscles or flexibility. Kim Vaccarella, founder of Bogg, who sells handbags and accessories, had anticipated tariffs in China, where all of her suppliers are. So in January she visited Sri Lanka and Vietnam to find a supplier to quarantine the company.
She and her team received samples from Vietnamese manufacturers and were ready to order. However, after the White House imposes tariffs of more than 40% on imports from Vietnam, Vaccarella delayed the order until she could measure the impact.
“We felt like we were in a good place,” she said, before the White House announced tariffs in dozens of countries last week,” she said. “It's like, oh my god, we did all this work and spent all this money there without doing anything.”
Vietnam's tariffs have been suspended for three months, but confusion remains. Vaccarella said her company recently raised prices for some products by $5, but withdrew the increase out of respect for its customers. For now, it's brave to see what happens before taking that step.
“Every day you can ask me the same question, and that's a different answer,” she said, “it's insanity and uncertainty.”
