Retailers Face Challenges: How Tariffs and Other Factors Are Changing Store Expansion Plans

The U.S. retail real estate market remains strong, but retailers are feeling the heat from tariffs and other economic pressures.

The Impact of Tariffs

• Tariffs vary greatly depending on the origin of imports.
• China: 30% tariff
• Canada & Mexico: 30% to 35% tariff
• Uncertainty in inventory costs is making retailers cautious about expansion.

Other Economic Challenges

• Inflation
• Rising costs
• Global conflicts

These factors are pushing retailers to focus on protecting profits rather than expanding aggressively.

Retailers Still Expanding

• Necessity-based stores (e.g., grocery chains, fast-food restaurants)
• Discount stores

Changing Expansion Strategies

• Smaller store formats
• Example: Walmart's larger Neighborhood Market stores
• Pop-up stores for market testing
• Focus on services
• Example: Best Buy's Geek Squad service stores

Strategies for Success

• Flexibility and strategic planning
• Agility in supply chain management
• Keeping an eye on consumer trends
• Operational efficiency