How retailers can stay profitable amidst economic uncertainty

The retail landscape is continually evolving, shaped by dramatic shifts like the COVID-19 pandemic, pervasive supply chain disruptions, and more recently, the complexities introduced by new U.S. tariffs. In this volatile environment, retailers must adapt swiftly and intelligently to maintain profitability. Central to this adaptability is having comprehensive visibility into competitive, customer, and company data, that can help retailers navigate the current challenges and capitalise on emerging opportunities.

Understanding the U.S. tariffs

Initially, the Trump administration enacted tariffs across all countries, often at varied rates, impacting global supply chains. Currently, all trading partners, except China, are subject to a standardised 10 percent baseline tariff. While these tariffs aim to protect domestic industries, they introduce new costs and complexities for retailers sourcing internationally. To remain profitable, retailers need to rethink their sourcing, inventory, and sales strategies within this shifting landscape.

Diversify sourcing and manufacturing

Most brands will have already considered shifting their manufacturing base to regions like the U.S. or Europe, but the high labour and infrastructure costs make it impractical for many, especially those operating on tight margins. Instead, retailers should focus on identifying their most profitable alternative supply bases, leveraging data to find regions less affected by tariffs.

A modern OMS platform can support this approach through dynamic 'customer orchestration rules.' For example, a luxury retailer can manufacture the same SKU in multiple countries but restrict imports based on country-specific tariffs using 'made-in' constraints. This agility allows brands to adapt their sourcing strategies quickly, reducing reliance on high-tariff regions and maintaining competitiveness.

Sharing data across divisions and geographies

In an increasingly complex market, silos hinder responsiveness. Retailers must foster data sharing across all divisions and geographies, granting each unit access to comprehensive inventory data and locations. This transparency facilitates localised fulfilment strategies, such as;

Selling a curated product subset tailored to specific markets

Testing new categories or brands without overcommitting inventory

Applying region-specific safety stock levels to optimise stock turnover

By using granular inventory rules, retailers can offer flexible and precise order fulfilment options, improving customer satisfaction and reducing excess stock or stockouts.

Retailers can open stores in countries where their brands lack warehouses or deploy 'ship-from-store' models to test new markets before significant investment. These strategies can spread risk and diversify revenue streams.

Harnessing real-time inventory data

The backbone of responsive global fulfilment is real-time inventory visibility. Without accurate, up-to-date stock information, reallocating stock across borders becomes impossible. A distributed Order Management System capable of global inventory transparency enables retailers to route orders to the most optimal location—whether to avoid tariffs, meet delivery expectations, or capitalise on regional demand.

This capability empowers retailers to fulfil online orders swiftly, meet rising customer expectations, and maximise margins. It also supports strategic inventory positioning—balancing safety stock levels, managing product mixes, and optimising supply chain agreements.

Embracing technology for the road ahead

The core message is clear: in today's tumultuous retail environment, data-driven agility is paramount. The right tech stack that unifies inventory, order, and customer data can be a game-changer. They provide the clarity needed to make informed decisions amid uncertainty, optimise supply chains in real-time, and deliver exceptional customer experiences.

In conclusion, while new tariffs and external shocks pose significant challenges, they also present opportunities for innovation and strategic repositioning. By diversifying sourcing, sharing data, expanding into new markets, and leveraging real-time inventory management, retailers can not only survive but thrive in this new landscape.