Categories: Consumer Behavior

Predicting Consumer Demand this Holiday Season with Tariffs Looming

Intelligence Node recently published a study in partnership with Dynata, surveying more than a thousand US consumers about their thoughts on retail pricing, holiday sales, and how the US-China Trade War would affect them.

CEO Sanjeev Sularia talks about the consumer survey data, the uncertainties facing retailers and consumers, and the implications of proposed tariffs in the US-China trade war.
Read the WWD article here.Get the full report

The study conducted in August 2019 indicates a wavering consumer faith in the US economy as retailers are pushed into the markup dilemma to battle tariff war on Chinese goods. About 40% of all clothing and 70% of shoes sold in the U.S. are made in China, according to the American Apparel and Footwear Association. These businesses have very low margins to begin with and Chinese manufacturers are firm on passing on the additional levy onto their US counterparts.

As retailers and consumers plan ahead to make the most of the upcoming holiday sales season, the US moves to escalate ongoing trade frictions with China. Retailers operating in the fashion and electronics industry, who have been overly-dependent on China for manufacturing their goods, will need to rethink their business model in the coming years if the proposed tariffs take a big bite out of their slim profit margins. About 31% of the survey respondents attributed their repeat purchase from the same store to “low prices” and more than half the respondents (54%) were concerned about the increase in product prices as a result of the new tariffs.

Beyond low prices, our study also indicates that more than half of consumers (57%) are concerned about counterfeit products when shopping online for luxury goods, indicating that apparel brands should consider sourcing outside of China where they can control quality, costs, and distribution channels more tightly.

The above signals combined with the diminishing brand loyalty among the new-age shoppers have further increased the pressure on brands and retailers to be competitively priced.

Now more than ever, retailers need to take a hard look at their pricing systems and adopt AI-driven pricing solutions to help them keep every margin dollar possible. With the right dynamic pricing technology, retailers get real-time pricing insights for specific items in their inventory that are immune to competitive forces and know which items need to be priced more aggressively to grow revenue. This technology works in real-time so that retailers can see side-by-side comparisons and exploit stock gaps in the competitive landscape to ensure that they are not bleeding margins on certain items or falling into the trap of over-discounting.

To examine how your business can minimize the impact of tariff wars using dynamic pricing solutions, get in touch with our team now.