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Patricia M. Johnson & Richard F. Outcalt
Retail Strategists and Retail Turnaround Experts
Co-Founders, The Retail Owners Institute® • Business Strata:G®
"As tariffs threaten to raise prices, a potentially existential question is facing retailers: How much inventory is too much or too little in such an uncertain environment—and is it worth squirreling away a little extra if higher costs are on the horizon?" *
That’s the question posed by Alex Vuocolo in the May 21, 2025 Retail Brew.
That vexing issue of “how much inventory is too much?” is not new to retailers, of course. But the volatility of the tariffs being imposed by the current administration are a significant complication.
So are retailers responding by “squirreling away a little extra if higher costs are on the horizon?” Recent earnings reports by publicy-traded retailers and logistics companies "show that some are choosing to stock up just to be safe," Vuocolo reports.
Amazon CEO Andy Jassy noted that where Amazon is the first-party seller, they have done forward buys. "And third-party sellers have pulled forward a number of items so that they have inventory here as well," Jassy stated.
Macro-level data paints a similar picture. The U.S. trade deficit increased 14% in March, and imports of consumer goods increased ten-fold to $22.5 billion, up from just a $2.4 billion increase in February. Somebody is squirreling inventory away!
Reading the tea leaves of macro-economics can be useful, but when faced with "How much inventory is too much or too little?", independent retailers are better served by focusing on two things: their customers' and their cash flow.
Retailers are keenly aware of how shoppers already have been dealing with inflation and increased costs. A research report from the Bank of America Institute shows retailers are remaining cautious, keeping inventory levels relatively lean.
According to David Tinsley, senior economist at Bank of America Institute, "When economic uncertainty increases, sometimes doing nothing is the best option. You might see firms being a bit hesitant to invest or hire, and I think probably the same is true on inventories as well."
After all, it’s what we call The Goldilocks Question about inventory: Too much? Too little? Or just right? Good luck!!
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*"How much inventory is too much to prepare for tariffs?" Alex Vuocolo, Retail Brew, May 21, 2025.
WEBINAR Of The WEEK
Many retail owners have faced this situation at one time or another: a fellow retailer (perhaps in your community, or someone you know through a trade association or buying group) asks for your advice.
Or - gulp! - asks for a loan! How would you respond? How should you respond?!
Or, consider this: Would you loan $50,000 to your own business?
Should you?!
This Webinar of the Week, led by Pat Johnson and Dick Outcalt, Co-Founders of The Retail Owners Institute®, will show you an approach to take whenever you face those kinds of requests.
The good news: There IS a way you can help without ruining the friendship – or your bank account.
Watch as we analyze the Shaky Company performance in a matter of minutes by calculating some key ratios. Then, once we compare Shaky’s current status to the Benchmarks for his retail vertical, the next steps almost write themselves.
👀 This lively and in-depth webinar is essentially a (free!) master class in retail financial turnarounds.
See for yourself how empowering it is to understand the cause-effect levers of retailing.
On May 15, the Commerce Department released the monthly retail sales numbers for April. As you know, we chart those results for the trailing six months compared to the same months last year.
Most sectors are up for April. Is it due to higher prices? More transactions? More items purchased?
The Commerce Department cannot track that. But you can in your own operation. After all, the reason to track metrics is to make better decisions going forward.
Be sure that all the data you track is actually “news you can use.”
As a retailer, you know that financial success isn’t just about sales—it’s about managing your finances with precision and confidence.
That’s where The ROI comes in, as the only financial resource designed specifically for retail owners like you.
With Member Access, you’ll gain unlimited, round-the-clock access to our entire Library of Resource Centers. Available on-demand, 24/7, whenever you need it.
Each month, hundreds of retailers across sectors—from gift shops to apparel and hardware stores—use The ROI to gain greater control over their business outcomes.
Sign up today! Experience the difference that access to The ROI can make for your business.
“If you think that being small means you can’t make a difference, try going to bed with a mosquito!”
—Anita Roddick, Founder, The Body Shop
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Walmart's announcement that its prices are increasing due to the tariffs is welcomed by some retailers as an "everybody is doing it" cover story for raising their own prices. They can recommend that their staff just dismissively say, "Oh, it's because of the tariffs, you know," whenever customers challenge them about the price of an item.
That approach, commiserating with the customer, is likely to become widespread. After all, we all are feeling the impacts of higher prices, from the gas station to the grocery store.
But here's another idea for you to consider, an alternative to the victim mentality of the-tariffs-made-us-do-it. It all comes back to controlling the controllables in your business.
First, recognize that your sales are likely to decline (or continue to be soft.)
Therefore, you won't need as much inventory on hand. That means you can focus on raising turns (e.g., buying a three months supply instead of a four, or five, or six months supply, etc.)
By spending less on inventory, you can redirect those funds to your expenses.
And here's the key: Your largest expense, and your most valuable asset, is your front line staff, your people. Now is the perfect time to give them a raise!
Isn't it much better to spend more on your people and less on COGS? You might be surprised at how many folks would agree with that!
Helping your staff deal with the higher prices facing us all is a good thing!
Most specialty retailers pride themselves on their excellent "customer service." So why not make it a competitive edge for you and your stores?
In this lively and timely Webinar of the Week, Pat Johnson and Dick Outcalt, Co-Founders of The Retail Owners Institute, present the new strategic perspective that owner's must have.
The Co-Founders show how any store – no matter the sales volume, price points, or merchandise – can magnify their own "special" competitive edge.
First, they review technology's impact on retail and "customer service."
Then, they explain how to create an internal training program that sharpens and maintains your competitive edge.
And finally, of course, how to evaluate whether it's working!
This fast-paced and inspiring session is packed with (free) consulting insights and tips. Be sure that you (and your key staff people) take advantage and gain these insights.
Your customers will be very grateful!
They love the merchandise they sell.
Or they love the people who buy the merchandise. (Think book stores, sporting goods stores, gift shops, etc.)
Others love the "theater", the excitement of retailing.
Still others want to be their own boss.
All good reasons, but they are not enough for success. The #1 cause of retail failures is financial. Exactly why The Retail Owners Institute has been built!
The ROI is organized like an inviting library—one built especially for independent retailers. Online, on-demand, 24/7.
Our nine specialized Resource Centers are gateways to proven tools and training resources especially for Owners.
Looking to fine-tune your profits?
Plan cash flow?
Build smarter inventory buys?
Deal more effectively with lenders or vendors?
Chart your long-term direction?
There’s a Resource Center for that. And much more. Tap into what you need, whenever you need it.
👉 Explore The ROI’s Library now! Browse around for free; there's much to see.
On May 15, the Commerce Department released the monthly retail sales numbers for April. As you know, we chart those results compared to the same month last year.
The Commerce Department cannot track that. But you can in your own operation.
What is “value” for today’s shoppers? Benefits received for the burdens endured.
Want to add more value for your customers? Unburden them!
The Retail Owners Institute® has been empowering retailers since 1999 to "Turn on their financial headlights!" Our tools and resources are trusted by thousands of store owners to help grow profitable, resilient businesses.