Anne D’Hynenzio, Associated Press
New York (AP) – Gadgets for sale without batteries. The toys are sold in slim down boxes or are not packaged at all. More household items shoppers need to gather themselves.
These are some of the ways consumer product companies are remodeling their products to reduce costs and increase prices.
The economic environment in which the president has imposed, threatened and sometimes postponed repeated tariffs is more unstable than his first term. US consumers feel they’re tapped out after years of inflation. Companies say tariffs add additional costs and dig into profits, but are cautious about losing sales when they try to hand over all the increases to their customers.
Instead, some companies are exploring cost-saving options that consumers are likely to notice in time. I remember “Shrinking?” – And what’s too much under the supply chain can’t be seen by them. This change could help minimize price increases, but in all cases it is not sufficient to completely offset them.
These are some of the strategies retailers and brands have in mind.
Supply Chain Kink
Trump said on Wednesday it would announce a “mutual tariff” target that reflects taxes in all other countries applicable to certain US exports after placing an additional 20% tariff on all goods from China and a 25% tariff on imported steel, aluminum and automobiles.
He argues that tariffs will promote domestic manufacturing, among other targets.
Also on the horizon: two late duties on most goods from Canada and Mexico, as well as copper, timber and pharmaceutical obligations.
Kimberly Kirkundall, president of International Resource Development for a supply chain consulting firm, tells clients that it’s not a long-term move to look for factories outside of China, taking all the uncertainty into consideration.
She encouraged focusing on the need to scrutinize a product line from all angles, especially to save money.
“In this situation, we have to work with our suppliers to help reduce costs,” Kirkendall said.
Procuring concerns is not just a concern for large companies that rely on Chinese manufacturers. Sashay Glehart, the founder of a small online clothing company called Shirt Story, has a collection of upcycled men’s shirts that sell for around $235. She said she usually gets vintage buttons from Austrian suppliers and knows Trump is talking about taxing goods from the European Union.
“We’re excited to be able to help you get started,” said Connecticut-based Iglehart.
Re-create the product
For many companies, evaluating which components or details can be removed from the product or replaced by cheaper companies is a go-to move to absorb potential financial blows from tariffs.
Abacus Brands Inc., a Los Angeles-based toy company, designs science kits and other educational toys, and has most of the products made in China. By using slightly thinner paper in the 80-page project book that comes with the two kits, the company hopes to avoid a $10 increase in retail prices, President Steverad said.
“Three or four cents here,” Rad said. “Seven cents or six cents there. Two more pennies over there. Suddenly, you made a difference.”
Aurora World, known for its gorgeous pet and toy vehicles, is considering using less paint colors as a way to compensate for customs costs, according to Gabe Higa, managing director of California’s toy division. All toys in the Aurora world come from factories in China.
“This makes it a little easier, like less physical labor or less material costs,” Higa said. “(It) doesn’t have much incremental value, so it’s easy to take away.”
He said the company may still need to raise prices as long as the new tariffs are in effect.
Economy Package
Tweaking or reducing product packaging is another area where importers can benefit from reducing and being attractive to green customers.
Jay Foreman, CEO of Basic Fun, who sells classic toys such as Tonka Trucks, Lincoln Logs and Care Bears, said he is offering retailers three different packaging options and asking them to decide which ones they prefer in their trucks and other products they have in store next spring.
The first is the current package. It consists of a box with a large open window where customers can see the contents. Second option: no box, only the tray attached to the bottom of the toy is held in place on the shelf. Third: It’s not unwrapped, but has a simple paper price tag featuring brand information.
The second package reduces the toy company’s cost per item by $1.25, while the packageless version saves $1.75, Foreman said. Both reduce the appeal of the product and are not approaching cancelling tariffs on goods made in China, Foreman said.
He said Trump will make a pricing decision later this week after providing details about planned mutual tariffs.
Abacus Brands is considering switching from plastic to cardboard in package inserts that keep toy parts in place to keep cardboard boxes to keep them in place to further reduce production costs. According to RAD, the price of a cardboard tray is 7 cents per unit compared to the plastic version of 30 cents.
This change requires finding a new factory to make the insert. Various customs related modifications should be effective for fall and holiday delivery to stores, Rad said.
“The compromises we’re making are something that doesn’t matter to consumers,” he said.
Forget the extras
According to Kirkendall, international resource development, shoppers will need to assemble more products at home as businesses try to cut shipping costs.
One of her clients manufactures self-water resistant planters made in China. This product has been redesigned so it can be shipped as a separate nesting component instead of being fully assembled.
Companies are also reevaluating essential or extra pieces of product. Chris Bajda, managing partner of online wedding gift retailer Groomsday, said accessories such as batteries and decorative gift boxes could be in the latter category.
“We now carefully evaluate what we really need and avoid including items in our customers that do not serve functional purposes,” Bazida said.
A retarded return?
As businesses tackle rising costs of materials, packaging, labor and transportation, they reduced the size or weight of their products without lowering prices, which is spreading as a business practice from 2021 to 2024.
Massachusetts consumer advocate and former Attorney General Edgar Dwardskey suspects that the makers of consumer goods will once again accept the contraction to hide costs in light of the new tariff explosion. For example, additional import taxes on Canadian softwood could appear on small toilet paper rolls, he said.
“The shrinking has been a bit quieter,” Dworksy said. “But we expect to see both a rise in prices and a shrinking product.”
Original issue: April 1, 2025, 1:46pm EDT
