By Mark Seavy  

As retailers and suppliers navigate ever-changing tariff rates, they’re charting a course for the fall and holiday shopping seasons that focuses on smaller collections and core brands. 

That will leave less room for new and up-and-coming brands as companies bet on proven properties. And while tariff rates on goods imported from China have come down from a peak of 145% in April, the added costs and uncertainty about where they will ultimately land is expected to result in tighter inventories at retail. 

Walmart and Target, for example, are said to have cut back their orders for Halloween costumes, which typically start arriving in stores in mid-July. Spirit Halloween cancelled the planned grand opening of its store and has trimmed its assortment of anime-related costumes. And Jakks’ Disguise costume division has reduced plans for lawn decorations and CoComelon-related products.  

Footwear supplier The SG Companies is focusing on its Rugged Shark, Sperry, and newly licensed Salt Life brand, which is being deployed across sandals and casual shoes, said Kristy Yvars, VP for Licensing and Marketing at SG. At the same time, SG’s licensing agreement for Bandai-Namco Entertainment’s Pac-Man brand is expiring at year-end, she said.  

“In determining what we are going to bring in that is new, we have to be strategic about it and there is going to be less depth than we might have otherwise,” Yvars said. “We want to honor the business we previously committed to, so that was the number one priority. In general, the strategy is to focus on the core [footwear] silhouettes.” 

Kohl’s, meanwhile, is reducing orders for categories where “the velocity of that demand just won’t be there,” CFO Jill Timm said, naming categories like small electronics, which are likely to see price increases from national brands. 

The core products across every category will likely be delivered at a higher price as we approach the fall and holiday shopping seasons. But how much the wholesale and retail prices will increase is still the subject, in many cases, of negotiation, licensing executives said. Mattel and Hasbro have indicated they plan to or already have raised prices. Walmart, Ralph Lauren, and many other companies have made similar indications.  

In response to the higher costs, licensees have broached lower royalty rates or extending minimum guarantees with IP owners, but few agreements have been reached, industry executives said. 

There have also been efforts to shift some production out of China, although that will take time and it will be difficult to move some manufacturing processes to another country, licensee executives said. For example, slippers that are hand stitched in China aren’t necessarily readily available in other countries like Vietnam, Yvars said.  

But there have been reductions in goods imported from China. The Shoe Carnival chain, which operates under its own Shoe Station and Rogan banners, reported that the amount of China-sourced products sold through its 431 stores has been cut to a “high single” digit percentage (down from 40% in 2019), CEO Mark Worden said. 

“It is not just about moving production [out of China],” said Julian Montoya, Senior Vice President at collectibles supplier The Noble Collection, which is launching products in connection with the release of Wicked: For Good in November. “The most important part is the capabilities. It doesn’t matter if you are going to save a 40% tariff if the vendors don’t have the capability to work with the materials needed. Some prices will go up and it will be a combination of us absorbing some of the cost and minimizing the amount that gets passed on to consumers.” 

Several companies—including Walmart, General Mills, Hershey, and Apple—were given high marks in the North Carolina State University Supply Chain Resource Cooperative’s Tariff Resilience Index. The index is based on a company’s purchasing management systems, strategic sourcing capabilities, breadth of supply-market intelligence, and the degree of collaboration available through its supplier network.  

And some retailers are confident they will be able to meet consumer demand during the fall and holiday seasons. Shoe Carnival has “elevated” inventory levels as a hedge against supply issues, Worden said.  

“We’ve made a deliberate decision to maintain elevated inventory levels in the current environment, leveraging our strong balance sheet to navigate marketplace uncertainties,” Worden said. “We determined the best approach to serve customers during the back-to-school and holiday season was to invest early in key products, maximize our in-stock position, and ensure our stores are fully prepared.”