Music & Sound Retailer August 2019, Vol 36 No 8

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I N T H E T RENCHE S

Dealing With MI Uncertainties By Allen McBroom Life is full of change. Some changes are welcome, and others, well, not so much. As we mature, we learn that some change is inevitable. Our kids grow up and leave the house, new neighbors can be less friendly than the previous neighbors, gasoline costs more today than it did last week, etc. Those changes cause small ripples in the fabric of our lives, and a bit of time usually irons them out without lasting impact. In business — and seemingly especially in the MI business — we often have changes looming that may or may not have a measurable impact on our business lives. There was an old Greek guy named Heraclitus. He once famously said, right after finding out that the price of a flask of wine had gone up again, “The only constant in life is change.” Had Heraclitus run a lute and lute accessories store back in ancient Greece, he might instead have said, “The only constant in life is uncertainty.” As I’m writing this month’s column, the specter of trade tariffs is dominating every news channel. For several months, the trade and tariff disputes between the U.S. and China have probably inspired some insomnia episodes among MI importers, as well as tension headaches among manufacturers who have to figure out pricing plans in the midst of widespread tariff uncertainties. Retailers are 38

having to deal with weekly emails from their suppliers announcing the news that, due to tariffs, their costs are about to go up. The angst finally trickles down to the retail consumer, who raises an eyebrow when he/she notices his/her favorite bottle of cymbal cleaner is now 20-percent higher in price than it was this time last year. Retailers not only have to deal with new pricing plans, they have to re-mark their instore product, update their websites, fix their pricing on eBay and Reverb (or Amazon), and contend with the MAP-violation emails that result from missing one link in the chain of pricing updates. And all of this joy is the result of just one prong of uncertainty: the level and tenure of tariffs on Chinese goods. If tariffs compose just one prong of uncertainty, thinking about the whole fork can be downright scary. And there is a lot to be uncertain about. If your lease has to be renegotiated in the near future, your landlord might decide to use that new lease to pad his/ her retirement account. How much more the internet will encroach on your walk-in traffic is another prong of uncertainty. And if you sell online, the uncertainties of how and when sales tax will have to be collected and remitted might remind you that your ulcer isn’t quite

healed yet. The list of uncertainties we deal with day in and day out can be a long one, but it doesn’t have to make our days dark and full of gloom. Bono once said, “Perspective is the cure for depression.” I’m going to suggest perspective is also the way to deal with the uncertainties of today’s MI retail environment. First, let’s put tariffs into perspective. Yes, tariffs will cause some of your costs to go up, but the exact same thing is happening to every retailer who carries those same products. So, you are not at any more of a disadvantage in the marketplace than you were before tariffs kicked in. All retailers who stock that tariffed product will see their costs go up by the same percentage, so it’s not like tariffs will make your product line more expensive than some other retailer. Tariffs are a rising tide, and they float all boats equally. Need to renew your lease pretty soon, and you’re concerned that your landlord is going to raise the rent? Consider this your notice to look for a place to buy. Yes, buying is a big commitment, but unless you’re planning to fold up your tent in five years, you’re already making big commitments all the time. Interest rates are still fairly low for commercial property, so go take a look and see what’s out there. If you can’t come up with a place to AUGUST 2019