Las Vegas – New statistics show that 65% of retailers believe the tariffs will mess up their business and 50% don’t know what to tell customers.
Industry journalist and moderator Warren Shoulberg revealed these numbers as he began a panel during the Las Vegas Market about the evolving tariff landscape and its wide-reaching impact across the gift and home industries. Panelists included Keith Koenig, CEO of City Furniture; Doug Cofiell, CEO of Ivystone Group and Christopher Grubb, president and founder of Arch-Interiors Design Group.
The panelists shared their take on how brands and retailers are responding to the current climate, and what strategies they are using to stay resilient and competitive. Cofiell from Ivystone said that many vendors are either raising prices or adding surcharges.
“The tariffs mean there are often new prices on already purchased merchandise that range between increases of 5% to 15%,” Cofiell said.
He added that seasonal vendors are the hardest hurt since they won’t be receiving all of their Halloween and holiday merchandise. In many cases, he believes only 70% of the holiday orders placed earlier this year will actually arrive.
Koenig, whose retail company City Furniture is based in Florida, said things are different on the home furnishings side. “I know this sounds crazy, but this might all offer an opportunity for this industry,” Koenig said. “We have been moving out of China over the past several years. So, we are more prepared for these changes.”
Koenig said City Furniture now sources tables from a couple who have a factory in Vietnam. He said for City Furniture, which is based in Florida, direct import shipping is often less expensive.
“Many of our customers aren’t aware of the tariff issues,” he added. “We were able to negotiate with many of our factories overseas to share the financial burden of the tariffs. Some absorbed close to half of the costs.”
For his part, Grubb said the past few months of tariff changes have been like playing a roulette wheel and the factories that his company works with overseas did not absorb any of the increased costs.
“The day-to-day reality is that we often find out the price after the product has landed in the U.S.” he said. “For us, the surcharge is a reality and its cutting into our profit.”
But since Grubb works with luxury clients, they have the option of substituting pieces for items that are less expensive. He said many of his clients would prefer not to use a cheaper alternative so will delay the renovation.
Cofiell, from Ivystone, works with the gift and home industries, including seasonal categories. He said the timing of the 145% tariff was unfortunate since it happened after most retailers had placed holiday orders. Now they either can’t afford the orders, or, in many cases, the shipments won’t arrive in time.
“With many of the seasonal goods, such as Christmas trees and lights, those items can’t be made in the U.S.,” he said. “I think consumers began to realize that something was up when Walmart and Amazon raised prices.”
Creative retailers are pulling out more generic orange and black items and calling them seasonal merchandise for Halloween and then using red, green, silver and gold items as holiday goods. Grubb explained that one of his many challenges is that many glass and metal parts along with the hundreds of pieces needed to make faucets, are only made in China.
“I am also hearing from contractors who can’t keep many of the talented artisans who lay tile, for example,” he said. “Many of them have returned to their home countries taking their talent with them.”
For his part, Koenig isn’t worried about finding employees in Florida since there are many talented people in the area. But he said that one of the main drivers of furniture sales are new home sales and home resales, which are down.
“They are at the lowest level since 1992,” he said. “We are all waiting for interest rates to go down and once they do, I’m predicting a boom time for furniture.”
Cofiell said many of his vendors and their consumers are having sticker shock. Companies are putting a flag on certain merchandise and selling it for more. The panel discussed whether consumers would continue to buy a frequently purchased item if it went from $40 to $55.
“Made in the U.S. has been coming up more often,” Grubb said. “It resonates with people since it feels local. There is an increased curiosity about U.S.-made product.”
Koenig said he doesn’t believe that people will stop buying furniture since it is usually a planned purchase. His company is thoughtful about price increases since they understand that you can’t overcharge consumers. The Kevin Charles brand for City Furniture is made in the U.S. and Koenig said his customers realize the value of purchasing U.S.-made items, even though they might have a higher price tag.
“We’ve purchased higher end Vaughn-Bassett product for years and its about 50% more than imported items, but it still sells,” he said.
Another tactic that retailers are using to encourage more immediate sales is to encourage people to buy before the tariffs go up again.
“But, at this point, there is no pre-tariff inventory in stock,” Cofiell said. “Large companies purchased all the inventory before the increased tariffs went into effect earlier this year.”