Raising prices to offset the impact of the latest round of tariffs on Chinese imports will be the "last resort" for Walmart Inc., the retailer's Chief Merchandising Officer and Executive Vice President Steve Bratspies said Sept. 4 at the Barclays 2019 Global Consumer Staples Conference.
"At the last resort, if we have to raise prices we'll do that to manage our margin to where we need it to be," Bratspies said. "Our goal is to offset as much as we possibly can, either through negotiation or managing [merchandise] mix."
The U.S. on Aug. 23 increased tariffs on $300 billion worth of Chinese imports to 15% from 10% in two tranches. The first tranche went into effect Sept 1, while the second tranche will be implemented starting Dec. 15. Existing tariffs on $250 billion of Chinese goods were also raised to 30% from 25%, effective Oct. 1.
The tariff on $300 billion worth of Chinese imports, which affects consumer products including apparel, footwear and toys, will be tougher to manage as it targets a broader range of the retailer's product assortments, according to Bratspies.
Bratspies also addressed the recent news of Walmart's plan to open a health clinic in Dallas, Ga. The retailer, which has a healthcare business that represents about 10% to 11% of its total business, plans to open the clinic in September.
The model of the clinic can be likened to a Walmart supercenter in terms of the varying services it provides for different customers, Bratspies said.
"The mindset is how do you give customers a broad assortment of choices at the Walmart value price. That is one of the biggest challenges in healthcare today," Bratspies said.
The retailer is expected to make an official announcement regarding its plans for the health clinic in the coming weeks.
