A New Tariff in Town

There’s a bull in the China shop just as retailers are trying to get ready for Christmas
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Posted July 9, 2019

A New York Times article in mid-June opened with a photograph of a shopping mall in Galesburg, Ill.

It was clear from the photo that this particular mall was of 1970s vintage. And the same photo taken back then, or even into the 90s, would have shown the parking lot filled with cars and throngs milling through the mall entrance.

But this photo was taken in 2019. And there were cracks and weeds where there used to be cars. And no throngs. No signs. Just an empty concrete shell.

In Xanadu did Kubla Khan [a] stately pleasure-dome decree.” Or maybe it was General Growth Properties.

This had been the Carl Sandburg Mall, named after one of Galesburg’s noteworthy natives. “I have often wondered what it is an old building can do to you when you happen to know a little about things that went on long ago in that building.” (Okay, Sandburg might not exactly have been writing about a mall.)

Sadly, there is nothing unfamiliar about this photo. Except for certain high-power, well-located A-malls, empty concrete shells and weeds in the parking lots have become the norm. Some 13,000 retail doors have closed in the past couple of years, many of them in what was retail’s greatest contribution to contribution to the post-war 20th century – the suburban, enclosed, shopping center.

Blame it on Amazon, or whomever you blame for the Internet tsunami that put your village underwater.

But the Times article was not about e-tailing, or showrooming, or social media or any of other 21st century technical innovations.

It was about tariffs, a centuries-old British practice that the brand-new U.S. imposed in 1789 to try leveling the balance of trade. It was controversial even then. But young America, isolated by two oceans, was trying to derive some income to keep its neophyte experiment intact.

The experiment, of course, survived. But now, there are different issues. The newest tariffs on Chinese imports that Washington has been threatening cover not only commercial and industrial products but also all of the consumer goods we’ve become accustomed to importing from China, where labor and materials are much less expensive than in the U.S.

The idea is to support American-made goods while punishing China at the same time. But it’s retailers and their customers who are caught in the crossfire. (I don’t know if China is supplying U.S. retail with its robust store fixture industry, but that would be still another arrow into retailers’ hearts.)

The Times article notes that, even for profitable chains, “the new duties threaten a successful business formula: import cheap products from Asia and sell them at rock-bottom prices, with decent mark-ups.”

Worse, said the article, “this next round [of tariffs] is aimed squarely at consumer goods like footwear, toys and apparel.” Washington, D.C.-based NRF estimates that China currently supplies 42 percent of all apparel, 73 percent of household appliances and 88 percent of toys sold in the United States.

And what’s more, as The Times noted, “all these chains are currently preparing orders for the holiday season.”

Economics 101: If prices rise, people spend less. Happy Holidays.

As a journalist, writer, editor and commentator, Steve Kaufman has been watching the store design industry for 20-plus years. He has seen the business cycle through retailtainment, minimalism, category killers, big boxes, pop-ups, custom stores, global roll-outs, international sourcing, interactive kiosks, the emergence of China, the various definitions of “branding” and Amazon.com. He has reported on the rise of brand concept shops, the demise of brand concept shops and the resurgence of brand concept shops. He has been an eyewitness to the reality that nothing stays the same, except the retailer-shopper relationship.