With a threat of tariffs on the horizon, business journalists covering the retail beat are on the lookout for the likely impact on everything from prices to consumer sentiment to global trade.
The Society for Advancing Business Editing and Writing (SABEW) hosted a webinar on Dec. 12 to highlight these key issues and provide tips to journalists tasked with covering the dynamic U.S. retail industry.
The webinar was moderated by Jordyn Holman, a business reporter at The New York Times, and featured three panelists with many years of experience covering the consumer, retail, and trade beats.
Emily Cohn, consumer team leader at Bloomberg, began the discussion by explaining why she enjoys covering retailers. “These are the companies that you can touch and feel and smell and taste. That’s always drawn me to the consumer beat.”
Adding to that sentiment, Ana Swanson, a domestic correspondent for The New York Times who covered trade for the first Trump administration and continued into the Biden administration, noted that “trade can be a really dry and arcane topic on the one hand, or it can be a very accessible and immediate topic because it involves the things that you touch and use every day.”
Gabrielle Fonrouge, a retail reporter for CNBC, noted that one thing she enjoys about her job is the opportunity to talk to CEOs on earnings calls every quarter to ask the tough questions that consumers want answers to. “It actually just so happened that ELF Beauty was reporting earnings on the day after the election. I was able to ask their CEO, who has a huge exposure to China, what does this mean for tariffs? And we were able to include some really important information about prices potentially going [up].”
The panelists emphasized the variety of story opportunities this beat has to offer and gave advice on how to always think creatively when it comes to covering retailers.
Make tariffs understandable
A question on a lot of consumers’ minds is how the tariffs the Trump administration is promising to place on several countries – including the United States’ major trade partners, China, Canada, and Mexico – will impact their families. In some ways, Swanson said, consumers are right to be concerned based on what she has reported on in the past. “With the China tariffs [in the past], there were economic studies showing that the bulk of those costs were passed along to American consumers. And economists have different theories about why that is.”
Although tariffs are surcharges placed on imports, companies do not always pass that cost directly on to the consumer. Swanson explained that companies have a variety of options to offset the costs of tariffs including passing the cost onto their suppliers or reducing their profit margins. Companies may also wait to make a decision until they see how the tariffs play out in their business model. “I think consumers are jumping to a lot of conclusions with pre-tariff sales, that the prices of goods might go up right away, and certainly companies might use that as an excuse to raise prices… but it’s also certainly not a guarantee,” Swanson said.
Swanson also noted that companies are adopting different strategies to get around tariffs which may not benefit American companies. “When you put tariffs on China, a lot of companies instead of coming back to the United States, they just moved to other low-cost countries. They found suppliers in Vietnam or Mexico,” said Swanson.
CNBC’s Fonrouge added: “It’s going to be a while before we actually see [tariffs] show up on the sticker and we all have to really be questioning who did that and why and when.”
As an example of how she has made tariffs interesting to readers, Swanson recalled a story she wrote about the classification of the Snuggy, a type of wearable blanket. The company that made the product took the U.S. government to court to argue that the Snuggy was a blanket and not apparel as it had been formerly classified. As the article noted, “the tariff on imported blankets is 8.5 percent, whereas the tariff on imported “pullover apparel” is significantly higher at 14.9 percent.” The court ruled that the Snuggy was indeed a blanket.
Companies will not only fight over the classification of their products, some will even alter their products to ensure classification in a lower tariff category. Swanson explained that many Halloween costumes don’t have zippers or fasteners and are made in particular fabrics so that they can be classified in a category that is tariff-free.
A disconnect between economists, companies, and shopper sentiment
Tariffs aren’t the only factor impacting the price of goods. Bloomberg’s Cohn noted that it is important for reporters to explain what factors are affecting prices in order to bridge the gap between what the economic data show and how consumers are really feeling about the economy. “It’s our job as consumer reporters to tell that story more completely,” she said.
Fonrouge noted that the holiday season can be one of the best times of the year to check in with consumers. “One of the things I made a point to do over the last couple of months is go out and talk to shoppers and actually try to get a better pulse. Like, how are you actually feeling? … Are you guys worried? Are you feeling good? And I got a lot of bad vibes.”
In particular, Fonrouge noted that she has seen – and written – a lot of successful stories by taking what consumers say about their experience with a company and comparing it to what top leadership in those companies say. Using a fellow reporter as an example, she explained that when the reporter asked the CEO of Target if he could quantify sales lost from shoppers frustrated about products being locked up, he had a very different take on the matter than what the reporter was hearing from shoppers. He stated: “…actually what we hear from the guests is a big thank you, because we are in stock with the brands that they need when they’re shopping in our stores.”
That explanation showed how out of touch some companies can be with their customers. It is up to reporters to bridge that divide and not allow companies to explain away bad quarters by blaming theft or saying that people simply aren’t spending money anymore.
Trading down
Fonrouge said that although consumers are expressing negativity about the economy related to inflation and rising prices, that does not necessarily translate to an automatic reduction in spending. The economic data make it clear that consumers are still spending money. In addition to rising credit card debt, some consumers are choosing to “trade down” – shopping at cheaper retailers – or being more selective about how or where they spend their money.
“We see a lot of shoppers who maybe used to do their grocery shopping at Whole Foods or their other more expensive, convenient place, trading down for value at Walmart,” said Cohn. Additionally, Cohn noted that Target used to rely on shoppers coming in for one item and filling their basket, but many shoppers simply aren’t doing that anymore.
Holman chimed in by saying, “Those can be the same person shopping, but it’s just how a company will spin it, basically being like, ‘nobody wants to shop here because they have no money.’ It’s like, ‘No, they’re just actually over here now.’ So I think that’s one thing to consider when talking to CEOs [and] thinking about how companies are positioning themselves.”
Fonrougue said that compared to previous eras of retail, there is a lot more overlap in consumer segments and some retailers are simply better at adapting to these changes than others. “One company is doing a better job of providing what that consumer wants, and when consumers are low on money and feeling the burn, they’re just going to be a lot more choosy about who they’re actually going to spend on, and I think that’s really what’s defined the last year. And I think we’re going to continue to see more of that,” she said.
Bloomberg’s Cohn emphasized how each of these individual stories can give the reporter a more detailed picture of what is really happening. “I think when we see these things play out, we just need to remind ourselves that every shopper has a different story, every store has a different story and it’s our job to… group all this stuff together in a very big picture way,” she said.
