Retailers are encouraged to take bold, immediate action as global trade policies shift and economic pressures mount, according to a report released by Alvarez & Marsal’s Consumer and Retail Group.
“We are in a false moment of calm, but July 9 is right around the corner. While the latest quarterly results may not yet show the impact, companies that fail to act now will see tariffs hit hard in the quarters ahead,” says Joanna Rangarajan, managing director in Alvarez & Marsal’s Consumer and Retail Group and co-author of the study. “They should be looking to identify every opportunity to improve and fortify operations, as those who successfully came out of COVID did.”
“What we are seeing is a shell-shocked level of inactivity. Companies need to use this tariff crisis as an opportunity to do the hard work of getting their SG&A numbers down by 15-20%. Looking at pricing, reaching out to vendor bases and shifting country of origin are no longer enough. This is the perfect moment for management teams to refocus on optimizing their inventory, speeding up calendaring, and ultimately assessing their total cost of tariffs so that they can work toward an equivalent level of budgetary savings,” adds Michael Prendergast, managing director in Alvarez & Marsal’s Consumer and Retail Group.
Key takeaways:
· The report lays out nine areas in which retail companies should be focusing to navigate tariff twists and turns successfully, including reducing costs across the entire organization; fueling innovation and growth initiatives that differentiate; doubling down on product winners that drive value; price intelligently to spark demand without sacrificing margin; adopting a fast fashion calendar mindset to increase agility; making decisions at lightning speed; favoring action over perfection; reshaping sourcing strategy for flexibility and long-term advantage; optimizing supply chains for efficiency and responsiveness; and establishing a cross-functional command center with clear accountability.
