Retail giant Target has taken a firm stance with their vendors and communicated they will not accept cost increases related to levies on goods from China. The Wall Street Journal and CNBC recently discussed this announcement and the impacts this will have on the vendors who manage more than $156 billion in products that will now be impacted by these tariffs.
The retailer also said it expects suppliers to “develop the appropriate contingency plans so that we don’t have to pass price increases along to our guests.” While great in theory for the guests, the upstream impact is huge.
This mandate will have dramatic effect on the vendors, who are now rushing to find ways to offset this cost. Vendors are going to have to find creative ways to drive down their operational cost, while at the same time, looking to diversify their supply chain to countries outside of China.
In additional to long-term strategies, many vendors spent the summer scrambling to expedite shipments to arrive before the tariffs were imposed. The push to bring in product early will not only impact the ports, but vendors will need to find storage in their already full warehouses.
Forbes also reported on this announcement saying that “Other retailers, in fact, have been suggesting that this is a group problem and as such deserves a group solution.” It’s going to be a long road ahead as the entire supply chain analyzes how to respond to the new tariffs.