
Third quarter retail results began rolling out in early November and continued through mid-December, a period that spanned the days before the U.S. presidential election and the weeks afterward. Reports from major retailers were decidedly mixed, especially where home merchandise performance was concerned.
Nonetheless, the biggest forward-looking issue that came up in calls with investors was the prospect of higher tariffs and new tariffs during the second Trump administration. And on that subject, most retail CEOS sounded surprisingly unruffled.
There was a lot of “we went through this before in 2018 and 2019,” and “we will work closely with our suppliers to mitigate tariff impacts” and “we can pull a lot of levers to cut our costs.” Off-pricers in particular struck an al-most confident note, asserting that even if full-price retailers wind up hiking prices, their own retails would still be lower by comparison.
Walmart and Dollar Tree Inc. were among the few to cop to the reality that tariffs = higher costs = higher prices on goods = tougher spending choices for consumers.
Some suppliers have also been putting on a brave face, especially those not heavily dependent on China. Manufacturers from India and Pakistan are hopeful they’ll pick up new programs – and a few say they’ve been in discussions with their accounts for months on that issue.
I just can’t help thinking the jaunty tune that opens “The King and I”: “Whenever I feel afraid/ I hold my head erect/ And whistle a happy tune/ So no one will suspect…”
On background, one hears a different story – about retailers pulling back on receipts and suppliers tabling decisions about investing in new textiles solutions and technologies.
Heimtextil and the winter trade shows in the U.S. should give us a clearer picture on the outlook for 2025 from both retailers and vendors. But it is fair to ask whether there is any reason for outright optimism about business in the quarters ahead.
In conversations with suppliers, two come up most frequently. First, the idea the housing market will improve this year as interest rates ease down and home sales stir to life. The chief economist for the National Association of Realtors, a retail estate trade group, recently predicted that housing sales will rebound between 7% and 12% this year.
Second – and I hear this one the most often – has to do with the calendar. Suppliers in several home textiles categories have noted that we are now nearly five years on from the big pandemic spending splurge on home. Thus, they believe, the time has come for consumers to freshen up again. It remains to be seen how aggressively they’ll refresh, how soon they’ll start spiffing up their homes and how much they’ll be willing to spend.
Let’s hope the optimists are right. It would be nice to have a year that delivers solid growth for the industry.