Retail On Edge: Debt Ceiling, Interest Rates, China, And Biden Trade Policy

With a dose of cost control and less discounting – plus lower inbound shipping prices – big retailers have managed to keep their heads above water. However, that being said, the next two quarters could unleash a tale of woe. Retailers are fatigued with “Supply Chain” being the subject-du-jour and, as the drums pound in the media about the debt ceiling and potential default, retailers worry for their future sales and margins. China watchers are also concerned about sourcing new product, and they fret about their level of inventory – because inventory costs money and borrowing has become quite expensive. Too much or too little inventory will make or break the season.

Over the past few years, the “Supply Chain” topic actually spawned entire networks, numerous conferences, books, a few TV shows, and even has created the position of Chief Supply Chain Officer. Rumors are swirling that the much-heralded Biden Indo-Pacific Economic Framework (IPEF) will soon announce an agreement on supply chain coordination – and the finalization of the issue may actually flattened the terrain to signal an end of the discussion. Many think that the IPEF agreements will be great, but IPEF doesn’t go far enough and avoids the much bigger retail wish of improved market access for trade. With “Supply Chain” now seemingly under control, the discussion quickly relegates to post-game coverage – making room for the new topic-du-jour which is: “Inventory Management” – a distant cousin of one of Peter Navarro’s former 7 deadly China sins.