ThinkSet Podcast: The Real Cost of Goods: Tariffs, Risk, and the New Retail Supply Chain

Tariffs, shifting trade policy, consumer pressure, and supply chain disruption are forcing retailers to rethink how they measure cost, manage risk, and make sourcing decisions. Retailers can’t optimize profitability if merchandising and supply chain work from different numbers.

Murali Gokki, Ryan Poole, and Nathan Cray explore how retailers can diversify sourcing, better align merchandising and supply chain teams, and take a broader view of cost, margin, and risk.

Selected Transcript Summary

[00:00]
Setting the stage. Murali frames the conversation around both demand- and supply-side pressures facing retailers.

[01:00]
The consumer picture is murkier than it looks. Murali notes weakening consumer spend: rising delinquency and revolving credit use beneath the surface. Ryan points out that retail sales growth is largely inflation-driven (units are down) and predicts a “breaking point” will force retailers to lean harder on supply chain efficiency to fund pricing decisions.

[04:00]
The merchandising/supply chain disconnect. Ryan flags a recurring gap: supply chain and merchandising teams often aren’t aligned on metrics or key performance indicators, leaving efficiency dollars on the table. He uses case pack changes as an example of a decision that touches both functions but is rarely coordinated.

[06:00]
Three buckets of supply side disruption. Murali frames the pressure points as protectionist trade policy, rising regulatory and compliance burden (Europe ahead of the US, for now), and disruption to global oil trade.

[07:00]
Living with volatility as the new normal. Nathan argues that supply chains have stopped waiting for “stabilization,” citing IEPA tariffs being struck down and replaced, with more changes expected. His takeaway: cost can no longer be the only lens; risk must be actively designed into the supply chain, assortment by assortment.

[10:50]
Strategic moves: diversification and category roles. Ryan describes country-of-origin diversification accelerating past the “knee-jerk” reactions to tariff hikes and a push to define category roles (traffic driver, basket builder, margin play) to better link demand and supply decisions.

[13:00]
Tactical levers: sourcing and network design. Ryan highlights supplier consolidation and raw material-level cost management, plus network design shifts. Nathan describes fallout from the end of de minimis for Mexico/Canada warehousing, renewed interest in foreign trade zones and bonded warehouses, and storage capacity planning.

[17:50]
The metric retailers are missing: “dead net cost.” Ryan introduces the idea of a true net contribution margin metric—factoring in vendor funding, tariffs, duties, shipping, and markdowns—that would give merchandising and supply chain a shared, accurate view of where profit really comes from.

[21:30]
Aligning organizations around profit, not just cost. Nathan reframes supply chain as a customer-service function serving merchandising and the end consumer, arguing the real fix is cultural: getting the whole organization to optimize for making money rather than narrowly for cost or revenue.

[22:50]
External partnerships under strain. Nathan discusses working with third-party logistics providers, freight forwarders, and carriers as sourcing diversifies into smaller, more numerous shipments—including tactics like cross-border co-loading and using AI agents to manage shipment-level decisions.

[25:00]
What to watch: front-loading and tariff arbitrage. Both Nathan and Ryan note that retailers watch for front-loading holiday shipments amid uncertainty. Nathan cites a 48 percent spike in Shanghai-to-New York container rates (partly tied to the Strait of Hormuz disruption). Ryan adds a secondary market emerging around companies buying and reselling tariff-reimbursement liabilities.

[27:30]
Closing advice. Nathan urges retailers to dig beneath headline economic metrics to understand where strength is real versus inflated; and to weigh risk deliberately rather than defaulting to “myopic” cost-only decisions.