Retailers are looking for lower wholesale prices after a year of significant increases in response to rising costs across the supply chain.

Depending on the distribution channel, retailers have been asking suppliers to lower wholesale prices by 3-10%. Some suppliers have agreed, provided that part of the decrease is passed onto the retail price, licensing executives said. Other suppliers, however, are holding their ground.

These conversations come after many retailers launched promotions designed to attract cash-strapped consumers with lower prices in specific categories like groceries. Walmart, for one, intends to double the number of products—particularly in grocery—that will have lower prices in the second half of 2023 as part of its rollback strategy, said Stephanie Wissink, SVP for Investor Relations at Walmart.

Lower prices will also likely be found on private label products, which account for 20% of annual sales at Walmart and 30% of those at affiliate Sam’s Club, Walmart CFO John Rainey said. And on Monday, retailer Marks & Spencer joined a growing number of supermarket chains in the U.K. that are cutting prices.

The licensees that have held their ground on lowering wholesale prices argue that while shipping costs have declined from a year ago, labor and materials costs have not. For example, Funko collectibles, which once started at $9.99, have risen to $15.

“The macro-economic situation right now is very concerning, and people are much more conservative with their spending,” said Casey Collins, President of Licensed Consumer Products at Hasbro. “The supply chain and shipping costs are better, but we work with resins and those costs are still high. So, what used to be a product that previously sold for $9.99 is now $12.99 and that’s not coming back down because we all need to make money.”

In some product categories, however, wholesale prices have been reduced. Tabletop products supplier Lifetime Brands has passed through decreases on select items, according to CEO Robert Kay. Furthermore, Kay said Lifetime’s competitors are doing the same thing. Apparel supplier Isaac Morris has also agreed to some decreases, provided it’s also reflected in retail prices, Chief Revenue Officer and General Counsel Milin Shah said.

Another factor for manufacturers to consider is that the requests for lower wholesale prices may be reflected in product design.

For example, the size of the figures featured in new licensed diorama sets for Minecraft will be determined by the targeted price, said Julian Montoya, SVP at The Noble Collection. “But all of that is driven by our objective of the final product. A collector may want something a little smaller, but with all the detail and attention they are looking for.”

The push for lower wholesale prices also comes as retailers seek to clear excess inventory that’s expected to carry into the holiday buying season. As a result, retailers have been conservative in placing new orders or, in some cases, seeking to delay or cancel orders altogether. Retailers are also relying more heavily on tried-and-true brands, leaving less room for new ones, licensing executives said.

“The market is going narrow and deep in placing orders, and there is a hesitation to take bets on something new,” said Suzy Raia, SVP of Consumer Products and Business Development at BBC Studios, which is home to Bluey.

Yet, even as some retailers may be hesitant to test new products, many licensees are seeking to expand their business with new formats.

Funko, which opened The Dogg House in Inglewood, CA with rapper Snoop Dogg in January, is weighing an expansion with additional 5,000-square-foot stores featuring licensed brands, said CEO Brian Mariotti. And Funko licensed apparel and accessories affiliate Loungefly tested a House of Loungefly two-day pop-up store in London last November. Loungefly also operates stores in Universal and Disney theme parks, Dollywood, and the Kennedy Space Center.

“We are almost brand first and IP second because everything we do is a collaboration,” said Derrick Baca, SVP of Creative, Innovation, and Vision at Loungefly. “We are trying to be a lifestyle brand more than anything else.”