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What’s Behind the Retail Slump?

Say Contributor

Macy’s has reported steep loses in its second quarter, as many retailers are having a rough summer. Mercy For Macy’s Macy’s profits dropped 48% during its Spring quarter compared to last year, and shares have fallen 34%. The company blamed the decline on a slump in its warm weather gear, but mostly on a drop in international tourism. The company had to discount their clothes to get rid of inventory, eventually selling them at a loss. Department Sores Macy’s isn’t the only department store having a tough year. According to the Commerce Department, Kohl’s, Nordstrom, Dillards, and JCPenney all suffered losses as well. Retailers have had to deal with competition from big box retailers like Walmart, e-commerce companies like Amazon and boutique subscription services like M.M.LaFleur. But none of those are exactly new factors, and tourism experts suspect the main reason for the drop comes back to President Donald Trump’s ongoing tariff war with China. Everyone Loves A Tourist Macy’s CEO Jeff Gennette put most of the blame on the decline of tourists visiting America, and Tiffany’s CEO Alessandro Bogliolo, whose company has also taken a hit, pointed to a 25% decrease in tourism, which he noted was “even sharper for Chinese tourists.” According to the National Travel and Tourism Office, visitors from China contribute more to the economy than tourists from anywhere else, spending on average $7,000 per trip, which is more than double what people from everywhere else spend. But since last year, tourism from China has declined 5.7%. This fall is being seen as a combination of China’s ongoing economic slowdown and a response to President Trump’s tariffs, as the Chinese government has warned its citizens it’s not safe to visit America. And even stateside shoppers might be turned off if Trump’s tariff’s end up raising the price of China-produced good in Macy’s stores, though Trump is now reportedly planning to delay the tariffs until after Christmas. Stay Mobile While in store sales have been tough for Macy’s, Gennette points out that sales on its mobile app and buy online and pick up in the store service remain healthy. -Michael Tedder Photo: Brian Snyder/ REUTERS