As retailers continue to navigate an uncertain economy due to several factors, including tariff policies, economic slowdowns and geopolitical circumstances, a recent report from Wells Fargo, From Factory to Checkout: The supply chain story you didn’t know you were living, examined how retailers are reacting.
(The following is an excerpt from the report.)
How Retailers are Racing the Clock (and the Ports)
Retailers proved cautious in their approaches to rebuilding inventory for the fall and holiday seasons. Many delayed purchases until tariff clarity emerged, then front-loaded orders of high-demand seasonal goods while avoiding overstocking lower-margin items.
Wells Fargo Retail Finance data shows minimal year-over-year inventory growth in early 2025, with a notable spike from March to May, likely reflecting orders placed in late 2024 and early 2025 in anticipation of tariffs.
As goods arrive post-tariff hikes, companies are balancing higher costs with inventory levels and consumer demand forecasts. Retailers are evaluating their cost structures to avoid passing excess price increases on to consumers, with the expectation for pricing adjustments to be methodical and specific to certain items, versus a broad-brush approach as well as working closely with their vendors and manufacturers to absorb a portion of the incremental costs.
Meanwhile, other retailers are holding prices steady by cutting capital expenditures or freezing hiring. Although corporate margins cannot avoid compression due to the impact of tariffs, they remain above the trough last seen in 2021, which will allow retailers some room to absorb cost pressures.
Conversely, businesses with limited flexibility are at risk of stockouts or delayed restocking, especially for seasonal items (décor, apparel, etc.), which are largely sourced from China and have shorter shelf-life appeal due to a condensed selling period. The most important question now is what companies can be
doing to get ahead of the holiday shopping season.
What Retailers Can Do
Flex inventory strategy
Retailers with agile supply chains are better equipped to avoid stockouts, especially in categories like toys and holiday décor, where 80–90% of inventory is sourced from China.
Order less, risk less
Many are ordering conservatively to manage working capital and avoid exposure to volatile import costs. According to Wells Fargo Supply Chain Finance, June data shows steady invoice financing volumes, suggesting cautious optimism.
Interestingly, China's trade volume through the first half of June 2025 nearly exceeded all of June 2024, suggesting that some companies are cautiously resuming sourcing from China but the overall scale does not reflect aggressive restocking.
Front-load shipments
According to the Global Port Tracker report, tariffs are putting increased pressure on international trade, with import cargo volume at the nation's major container ports tentatively expected to end 2025 5.6% below 2024 volume.
This dip in cargo volume highlights the impact of tariffs, specifically on transportation and port levels. Meanwhile, the shift in volume from 58.1% ports on the West Coast in October 2024 to near parity (50/50) in May 2025 underscores the change in import patterns and the need for
strategic planning.
Diversify sourcing
China+1 strategies are gaining traction again. Retailers with agile supply chains, versus those with rigid sourcing models, are better positioned to respond to demand spikes or disruptions such as stakeouts, delayed restocking, or higher freight costs if product timing is accelerated (e.g., air shipment). Domestic
production is rising, but meaningful impact is not likely to be near-term.
Preserve cash flow
Supply chain finance programs are helping companies lengthen payment terms and preserve liquidity while managing inventory risk, helping suppliers maximize working capital.
