US Footwear: brands choose to relocate to Asia to protect themselves from the Trade War, and retailers (excessively) increase their stock

Supply chain system is under stress in the USA. Retailers and footwear producers are getting ready to make themselves safe from the hits of the Trade War by making two main strategic moves: the relocation from China to other countries in Asia of part of production, and increment of their imports from Beijing, with a consequent increase of stock being held in storehouses. Those measure, they believe, will make them ready for the potential duties headed their way. Steve Madden, for example, stated the company has compensated some of the costs that increased, by moving some of its production plants from China to other countries, or by negotiating discounts with its Chinese producers. According to NRF (National Retail Federation), the US ports moved, during the month of December, 1.97 million containers, equal to a 13.9% increase in comparison to the same period in 2018, and the growth trend should continue in the first quarter of 2019. “Yet, the anticipated shipments could bring an increment of inventory-related costs, thus reducing the companies’ profit margins”, said Jonathan Gold of NRF to Thomson Reuters. “Macy’s is already dealing with this sort of issue”, states Simeon Siegel, of Nomura Instinet New York. Others foresee that retailers will offer more discounts and other promotional prices to incentivize sales if the warehouses were to be excessively full”.

 

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