The recent tariffs, taxes imposed on imported goods, are already affecting three North Denver businesses.
Steve Pribyl, owner of SloHi Bike and Coffee Company, said tariffs are affecting his pricing and inventory. Much of the product sold at his bike shop at the corner of West 29th Avenue and Tennyson Street is manufactured in Taiwan, Vietnam and Indonesia. Some of his suppliers have already seen aluminum tariffs affect pricing and he has had to increase his own prices on chains and some bicycle locks.
He said he's been getting emails from some of his suppliers that are preemptively raising prices.
"Some of my suppliers are like ... we know the tariffs are coming. We are going to raise prices now," Pribyl said. Getting inventory is also becoming an issue for the shop. Pribyl, who was an employee at SloHi up until two years ago when he bought the shop, has traditionally tried to run a lean-inventory management strategy because he is just starting out on the ownership side of the business.
"I had a plan going into the year of how I wanted to do purchasing, and it mainly affects my inventory values," he said. "I want to keep my inventory low to have more cash on hand so I can react to things. Instead, I have to spend more money, get more products, some of it on credit, just so I have stuff for the year." Pribyl would like to buy more bikes to stock up before the tariffs hit, but there are a lot of bikes that have been snapped up by larger bike shops because of the fear of tariffs.
"It's getting harder to replenish inventory," he said, adding lead times on products are getting longer. "Things I thought I would get in a month might take two, three months. Everything is on backorder. Something I might have been expecting in May now might come in June."
Pribyl also had to cancel a demo program. He was supposed to get a set of demo bikes from one manufacturer so that he could have a bunch of bikes for his customers to test drive. That program was canceled by the manufacturer as they are starting to stockpile all of the bikes they have in the U.S. before the tariffs take effect. So he canceled that demo program for the rest of the year.
He has been talking to other bike shops around the country and said "they are nervous."
Jacque Killian, owner of the Beyond the Blackboard toy shop at West 32nd Avenue and Perry Street, said she is already feeling the effects of tariffs and has some serious concerns.
"Eighty percent of the toys that are sold in the United States come from China," Killian said.
With U.S. tariffs on Chinese imported goods currently at 104% to 125% as of May 1, it's having a major effect on the cost of toys. She noted that the vast majority of toy manufacturers are small and mid-size businesses and that tariffs are causing major problems for her suppliers and they are increasing prices.
"Every day we get emails from our vendors. We have one vendor that emailed and said the price is going up by 10% in two weeks," Killian said. "A week later, they replied back and said, "I know we told you 10%, but ... it's a 30% increase now." "
Killian said she has even had manufacturers cancel orders from months ago for one price and are requiring her to reorder those toys for a much higher price if she wants them to be shipped to her later this year. She also said inventory of toys is going to become an issue in the coming months, and what is happening now may slow the inventory of toys to come during the winter holidays.
She noted that some overseas manufacturers have stopped selling their product to the U.S. altogether because of the tariffs and are going to focus on the European and Asian markets for the near term.
"The manufacturers are notifying us that they no longer can afford to bring those products to the U.S. because they feel customers are not going to pay for these items," she said.
Killian also got a notification from The Toy Association. They surveyed their member base and estimated that nearly half of small and mid-size manufacturers run the risk of going out of business in the next six months.
"That's staggering. That is very scary," she said.
Faced with a dilemma on how to manage her inventory, Killian is debating on how much to stock up right now before there isn't much inventory left to buy.
"I don't want to create a huge cash-flow issue. How deep do I go? How much money do I risk? Do I hire the graphic designer across the street? Can I run events in my store? These are the questions that everybody has to be asking themselves," she said. "It's pretty stressful. You don't want to be the bringer of bad news as a toy store. We want to be hopeful. How did toys become a political thing?"
Killian's hope for the neighborhood is, "We would love for people to keep coming in, checking things out, shop small, shop local. It's your local businesses that are going to be impacted first. They are what make our neighborhoods unique. We need to rally."
Jimmy Funkhouser is the owner/founder of FERAL, an outdoor gear and clothing store that sells new and used goods, located on Tennyson Street near West 41st Avenue. Funkhouser said doesn't think most people understand the headache that tariffs are going to have if they are not dropped.
"I can tell you it is not going to be insignificant," he said.
He said that if the tariffs stick, there will be a price increase of 10-25% on the new clothing and outdoor gear that he sells, and that will be the first wave of price increases in May.
"I think a lot of people don't realize retailers don't really have a lot of control over price," Funkhouser said. "Every brand that we work with, they tell us what we have to sell new items for, and the brands set the price."
Funkhouser said that it will be the small-clothing and outdoor brands, especially the local ones, as well as the small retailers that will be affected the most. Because they conduct a much lower volume of business, they will have less leverage to negotiate on the impacts of tariffs.
FERAL is unique in that about 60% of their inventory is used. Funkhouser says their plan is to not increase their prices on used outdoor clothing and used gear. He said he thinks that "recommerce" will have an opportunity for consumers that might be seeking value if price increases do come to tariffs.
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