As we head towards a pivotal U.S. presidential election for retailers, it’s paramount that leaders in our industry pay attention to the impact it can have on their operations. The convergence of economic, political and regulatory risks presents a volatile landscape, demanding that retail leaders act swiftly to mitigate unprecedented challenges that will likely materialize in the coming months.

Why You Should Be Diversifying Your Sourcing

Based on the Consumer Markets cut of PwC’s latest Pulse Survey, 74 percent of consumer markets leaders believe the election outcome could significantly impact their business practices. Trade policies and tariffs occupy the forefront of their concerns, with 36 percent ranking it as a top three policy risk.

As retail leaders brace for these shifts, their ability to proactively adapt and manage their supply chains will be crucial in navigating the post-election landscape. Sourcing diversification will be a necessary strategy for retailers to help overcome these inevitable challenges.

The benefits of having multiple sources are numerous. Given the current landscape, retailers can’t afford to ignore them:

• Dependability: By diversifying sourcing, retailers can reduce overdependence on one country, which is subject to fluctuating trade relations and tariffs. Political turmoil and trade policy changes can also affect consumer behavior, so diverse sourcing helps retailers adapt and maintain a strong supply chain.
• Cost Efficiency: Shifting sourcing to countries with lower tariffs can help retailers manage and reduce costs, and having multiple suppliers across different regions can build a stable supply chain.
• Innovation: Different sources offer their own unique capabilities, products and variations that can help enhance a retailer’s product offerings and appeal to a broader customer base.

However, it’s not enough to just be aware of these benefits and react when issues come up — retail leaders should be proactive in putting actions in place. To realize these benefits and seize new opportunities for growth and stability, retailers should adopt a multifaceted approach to sourcing. This looks like the following:

1. Evaluate alternative markets and scenario planning. Retailers should be continuously assessing the political and economic stability of potential sourcing countries and be proactive with scenario planning to anticipate and respond to potential trade policy changes.
2. Build strong supplier relationships. Establishing relationships with multiple suppliers can help build reliability and quality. This involves regular communication, audits, and fostering long-term partnerships.
3. Invest in technology. Leveraging technology for supply chain management can enhance visibility and efficiency. Tools like blockchain and artificial intelligence can help track goods, predict disruptions, and optimize logistics.

The Smart Path Forward

Making smart adjustments based on new policies amid the post-election period shouldn’t be viewed as a one-time exercise, but instead a long-term plan that paves the way for sustainable success. Sourcing diversification will be a vital piece for adaptability, maintaining supply chain stability, and staying competitive in the current economic environment. But no matter the election outcome, the key to success for retailers will be their ability to embrace change, stay agile, and continuously update their strategies based on evolving market conditions.

Kelly Pedersen is the global retail leader at PwC.