How Retailers Tackle Tariffs: 3 Unique Strategies

Picture this: you’re strolling through your favorite store, eyeing a new pair of jeans or the latest gadget, when you notice the price tag seems a bit steeper than expected. Why? Tariffs. These pesky trade taxes are shaking up the retail world, forcing companies to rethink how they get products to your shelves. I’ve always found it fascinating how businesses adapt to challenges like these, and today, we’re diving into how three major retailers—Abercrombie & Fitch, Five Below, and Best Buy—are tackling tariffs with wildly different strategies. Their approaches not only highlight their unique business models but also offer a glimpse into the future of retail resilience.

Navigating the Tariff Storm: A Retail Revolution

Tariffs are like unexpected rain on a sunny day—disruptive, costly, and impossible to ignore. For retailers, they increase the cost of imported goods, squeezing profit margins and threatening price hikes for consumers. Yet, the way companies respond to these challenges can make or break their success. By examining the front-loading strategies of Abercrombie & Fitch, Five Below, and Best Buy, we can uncover what makes each retailer tick and how they’re weathering the tariff storm. Let’s break it down.

Abercrombie & Fitch: The Power of a Diverse Supply Chain

Abercrombie & Fitch, the apparel giant known for its trendy threads, has taken a proactive approach to tariff management by leaning on a globally diversified supply chain. Unlike retailers tethered to a single sourcing country, Abercrombie spreads its bets across multiple regions. Data reveals their imports come from Bangladesh (27%), Guatemala (14%), Vietnam (10%), and China (9%), with smaller contributions from Sri Lanka, Italy, the Philippines, Cambodia, Indonesia, and India. This diversity isn’t just a happy accident—it’s a deliberate strategy to cushion the blow of tariffs, which range from 15% to a whopping 50% on goods from India.

What’s the secret sauce? Abercrombie’s leadership, led by CEO Fran Horowitz, has a “playbook” for navigating trade challenges. As Horowitz noted in a recent earnings call:

We have a variety of options, including shifting global production, enhancing supplier contracts, managing operating expenses, and optimizing pricing strategies.

– Retail industry executive

This flexibility allowed Abercrombie to front-load shipments in January and April, timing imports to dodge higher tariffs when possible. For instance, when tariffs on Chinese goods temporarily eased, they seized the opportunity to pull forward inventory. However, tariffs have hit harder than expected, with a projected $90 million margin impact this year—up from an earlier $50 million estimate—due to steeper levies in countries like Vietnam and India. Despite this, Abercrombie’s commitment to avoiding broad price hikes shows confidence in their ability to balance costs without alienating shoppers.

Why does this matter? A diverse supply chain isn’t just about dodging tariffs; it’s about building resilience. By sourcing from multiple countries, Abercrombie reduces its reliance on any single market, making it less vulnerable to trade policy shifts. It’s like diversifying your investment portfolio—you don’t put all your eggs in one basket.

Five Below: Flexibility as a Superpower

Five Below, the discount retailer that’s a haven for teens and bargain hunters, takes a different tack. With 72% of its shipments coming from China, you’d think they’d be sweating bullets over tariffs. But here’s where things get interesting: Five Below’s business model thrives on flexibility. Unlike Abercrombie, which needs specific styles to stay on-brand, or Best Buy, which must stock particular electronics, Five Below can pivot its product mix with ease.

Imagine walking into a Five Below store. One day, it’s stocked with quirky antique mirrors and Hershey-branded S’mores makers; the next, it’s loaded with Tonka dump trucks and holiday decor. This agility stems from their ability to shop for the best deals globally, swapping out products based on cost and availability. A former retail executive put it best:

Five Below doesn’t need to have specific items. They can change their assortment and be opportunistic, featuring whatever offers the best value.

– Retail industry expert

This opportunistic approach is evident in their sourcing. While China dominates, Five Below also pulls from Mexico (8%), South Korea (7.3%), Vietnam (5%), and India (2%). When tariffs hit, they can shift focus to lower-cost regions or negotiate better deals with suppliers. Their front-loading strategy is less pronounced than Abercrombie’s, but they’ve still moved shipments strategically to avoid peak tariff periods. This nimbleness makes Five Below a standout in the tariff game, as they can adapt without disrupting their core promise of affordable, fun products.

Best Buy: The Challenge of General Merchandise

Best Buy, the go-to spot for electronics, faces a tougher road. With 60% of its products sourced from South Korea, 11% from Vietnam, 9% from Thailand, and just 8% from China, you’d think they’d be less exposed to tariffs. But here’s the catch: electronics are high-ticket items, and consumers expect specific brands and models—like that Samsung TV or LG refrigerator. This lack of flexibility makes front-loading trickier.

Best Buy ramped up imports in June 2025, pulling forward shipments of appliances like Samsung gas ovens and LG refrigerators. But compared to their 2024 peak season, when they front-loaded heavily to avoid a potential dockworkers’ strike, this year’s efforts were over 50% smaller. Why? Tariffs on electronics are a bigger headache than anticipated, and consumer price sensitivity is a growing concern. As one retail analyst noted:

General merchandise retailers like Best Buy will struggle to absorb tariff costs in the short term. It takes time to adjust sourcing models.

– Former retail CEO

Best Buy’s strategy hinges on negotiating with vendors and diversifying sourcing, but their reliance on specific products limits their wiggle room. They’ve already raised prices on some items to offset tariff costs, a move that risks pushing budget-conscious shoppers to competitors. The big question is whether consumers will stomach these increases or opt for cheaper alternatives elsewhere.

What These Strategies Reveal About Retail

Each retailer’s approach to tariffs tells a story about its business model and customer base. Abercrombie’s diversified supply chain reflects a brand that’s reinvented itself, focusing on adaptability and premium positioning. Five Below’s flexibility underscores its strength as a discount retailer, catering to shoppers who prioritize value over specific products. Best Buy, meanwhile, grapples with the rigidity of its product offerings, highlighting the challenges of selling high-ticket, brand-specific goods in a tariff-heavy environment.

Here’s a quick breakdown of their strategies:

• Abercrombie & Fitch: Diversifies sourcing across multiple countries, front-loads shipments strategically, and optimizes pricing to avoid broad increases.
• Five Below: Leverages product assortment flexibility, shops globally for deals, and adjusts inventory to minimize tariff impact.
• Best Buy: Front-loads specific high-ticket items, negotiates with vendors, but faces challenges due to limited product flexibility.

These differences aren’t just academic—they shape how each retailer connects with its customers. Abercrombie’s shoppers, often young and style-conscious, expect quality and trendiness. Five Below’s bargain-hunters want fun, affordable finds. Best Buy’s tech-savvy customers demand specific brands, making price hikes a riskier proposition.

The Consumer Factor: Will Shoppers Pay More?

Here’s where things get dicey. Tariffs don’t just hit retailers—they ripple out to consumers. If a store like Best Buy raises prices on TVs, will you still buy that shiny new OLED? Or will you hunt for a deal online? Consumer behavior is the wildcard in this equation. As one industry expert pointed out:

Consumers control inflation. If prices rise and they switch to cheaper alternatives, retailers will be forced to adapt.

– Retail industry veteran

Take bananas, for example. If tariffs jack up the price by 10 cents a pound, shoppers might grab oranges instead. Retailers then face a choice: lower prices to clear inventory or risk losing sales. This dynamic is already playing out, with retailers like Five Below thriving by offering low-cost alternatives, while Best Buy treads carefully to avoid alienating its base.

The Bigger Picture: Retail’s Tariff Playbook

So, what’s the takeaway? Retailers are pulling out all the stops to mitigate tariffs, but their success depends on their business model and customer expectations. Here’s a handy table summarizing their approaches:

I’ve always believed that retail is a bit like a chess game—every move counts, and the best players think several steps ahead. Abercrombie’s global sourcing is like a knight, weaving through obstacles with agility. Five Below’s flexibility is a queen, dominating the board with versatility. Best Buy, though, feels like a rook—powerful but constrained by its path. Each retailer’s strategy reflects not just their response to tariffs but their core identity.

Looking Ahead: The Future of Retail in a Tariff World

As we move into the latter half of 2025, the tariff landscape remains unpredictable. Retailers are bracing for a tougher third and fourth quarter, with consumer spending under pressure from inflation and trade policies. But there’s hope. Companies have had time to refine their strategies—whether it’s finding new suppliers, negotiating better deals, or tweaking product mixes. The retailers that thrive will be those that balance cost management with customer loyalty.

Perhaps the most intriguing aspect is how these strategies will shape the retail landscape long-term. Will Abercrombie’s diversified supply chain become the gold standard? Can Five Below’s flexibility inspire other retailers to rethink their inventory? And will Best Buy find ways to loosen the grip of brand-specific demands? Only time will tell, but one thing’s clear: the tariff game is forcing retailers to get creative, and that’s a win for innovation.

In my experience, the retail world is never static. It’s a constant dance of adaptation, and tariffs are just the latest tune. By studying how Abercrombie, Five Below, and Best Buy navigate this challenge, we get a front-row seat to the ingenuity that keeps retail ticking. So, next time you’re shopping, take a moment to appreciate the behind-the-scenes strategies that keep those shelves stocked—and your wallet happy.