In the wake of the Trump administration’s saying it plans to place tariffs up to 25 percent on as much as $300 billion worth of imports from China—and with China threatening to retaliate—two WPI business professors say that nervous retailers and manufacturers can take steps to minimize potential financial hardship with the holiday season in the not-too-distant future.
“More than ever, sellers need to think through what value they are offering to retain customers beyond price,” says Frank Hoy, Beswick Professor of Entrepreneurship at WPI.
Hoy and Shari Worthington, a lecturer in entrepreneurship & marketing at WPI, developed a mix of business advice for companies worried about their economic futures.
Hoy offered the following tips:
- Get cost-efficient quickly – Nearly everybody can reduce waste or cut inefficiencies somewhere.
- Ask your employees for advice – The best source of new ideas is the people who know your products, services, and operations inside and out.
- Re-examine your marketing strategies – Does your website need to be redone? Are you getting the most out of social media?
- Review your balance sheet – What does your balance sheet look like? Do you have debt you can get rid of? Can you work out extended payment plans with suppliers?
- Consider your business niche – Now is the time to re-examine your product line. Do you have some slow sellers you should drop? Are there other products/services you can add that exploit your current assets, expertise and distribution systems?
- Know your customers – Who are your customers? Are any of the important ones likely to be in jeopardy as a result of the tariffs? Are there prospective customers who might, for any reason, benefit from a trade war? There is always someone positioned to be a winner, intentionally or otherwise.
Worthington added the following tips:
- Look at your value proposition – Companies need to strengthen their value proposition for customers, whether it’s through enhancing loyalty programs or expanding online ordering.
- Target more affluent spenders – Retailers can spend more of their promotions budget targeting those who buy for quality, those with higher incomes, or middle-age consumers who do more discretionary spending.
- Do something fun with the holiday “sales” – Instead of just a holiday sale, maybe offer an “anti-tariffs” sale.
Both Hoy and Worthington added that, in the event the trade war is projected to drag on, retailers should reconsider their supply chains. “Many manufacturers are already moving production facilities out of China and into Vietnam and Korea instead,” says Worthington.
Adds Hoy, “If companies are not locked into long-term contracts, they are probably already looking at other assembly locations: Mexico, Brazil, and Vietnam, to name a few.”