Maumee’s Appliance Center offers ‘pre-tariff’ sale

November 4, 2018

By Jon Chavez | The Toledo Blade

Global trade is a volatile issue in Toledo, but one local retailer is offering a way to benefit from trade wars.

The last three weekends the Appliance Center of Maumee has run a “Pre-Tariff” sale of appliances and furniture at prices it says predate the negative effects of the current trade war with China and other countries.

In January, the Trump Administration levied tariffs on $92 billion of imported goods, including steel, aluminum, washing machines, solar panels, lumber for construction, and paper products.

The tariffs resulted in price increases in August ranging from 4 to 10 percent on many well-known appliance brands. Jenn-Air, a brand owned by Whirlpool, has three price increases thus far. A 7.2 percent increase on all Whirlpool products, including KitchenAid, Amana, Whirlpool, Maytag, and Jenn-Air is set for Dec. 27, reports say.

“Obviously, tariffs are all over the news and for good reason. They are affecting the market. We’ve seen price increase up to 8 to 15 percent already,” said Kenny Wanemacher, general manager in charge of the Appliance Centers three stores.

For example, a washer and dryer set, depending on the brand is about $700 at pretariffs pricing. Elsewhere around town, some retailers are selling similar sets for $900, he said.

Whirlpool Corp., which makes washing machines in Clyde, Ohio, and dishwashers in Findlay, raised prices 8 percent between April and June.

According to an NBC News report, data from financial analysis firm Thinknum estimated that since January, the average prices of Whirlpool washing machines at big box retailers have increased about 23 percent.

“Come January, there’s another 25 percent tariff, and we’re not sure how that will affect the manufacturers, even furniture manufacturers,” Mr. Wanemacher said.

Last June, nearly six months after the tariffs were announced but before manufacturers understood the full effects and raised prices, the Appliance Center opted to purchase a large supply of inventory and lock-in prices.

“We now have about $7 million worth of inventory that was bought ‘pretariffs.’ We’re in a pretty good position with our costs of inventory,” Mr. Wanemacher said. “We’re always trying to move inventory out, but we’re capitalizing now on the fact that our competitors, in general, have had to reflect pretty significant price increases.

“We can say that we haven’t had to do that because we’re sitting on this inventory that our guys got before the tariffs went into effect,” he added.

The pretariff sale is a “while supplies last” event. Some items already are running low, Mr. Wanemacher said.

The Toledo area already has its share of bruises from global trade issues.

Toledo-area workers at local auto suppliers plants were hit with job loss by effects of the North American Free Trade Agreement, and three years ago members of UAW Local 12 rallied to express their concerns over a rush to pass the Trans-Pacific Partnership agreement, which eventually was defeated.

However, Mr. Wanemacher said the response to a sale tied to a sensitive political issue — tariffs — has been strong.

“It’s been awesome. Really, really good,” he said. “Since we announced the pretariffs pricing, it’s been really busy. Customers are smart and they know these are smart prices.

“And they know prices are going to go up and up and up. If you don’t buy now you’re going to pay higher prices for appliances,” he said.

Retail analyst Burt Flickinger III said a “Pre-Tariffs” sale is a “very smart” marketing idea.

“It’s a proverbial last, best opportunity for consumers to save money. It makes commercial common sense,” he said.

“For the smarter retailers, it was apparent earlier that there would be a trade war leading to higher prices. And given that inventory on appliances only moves two to three times a year, or every 4 to 6 months … I think it’s a brilliant marketing and merchandising move that will save Ohio and Michigan consumers a considerable amount of money that they could use later on for Christmas spending,” he said.

The last round of tariffs took effect Sept. 24 and imposed a 10 percent increase. On Jan. 1, a 25 percent increase will be imposed on refrigerators, washing machines, and components for other appliances.

But higher prices on appliances could come as early as next month.

In a conference call Wednesday with Wall Street analysts, Marc Bitzer, CEO of Whirlpool Corp., said the company has informed its customers of “additional cost-based price increases in multiple regions, including our U.S. kitchen and Brazil businesses, which will become effective during the fourth quarter.”

Whirlpool anticipates tariff-related cost increases for raw materials of $300 million in 2019, he said.

Bethany Aronhalt, a spokesman for the National Retail Federation, said the federation lately has begun to see a few examples of tariff-related sales by retailers trying to educate consumers that the time to buy is now.

“Retailers across the country are preparing for the tariff rate to spike to 25 percent in January, and in the meantime they are adopting any strategy they can to stay competitive and serve their customers,” she said.

“Every retailer is different as to where their inventory stands, but in 2019 is when we’ll really see prices hit the consumer,” she said.

“We agree that there are real concerns over China’s unfair trade practices, but tariffs are the wrong approach and are going to punish consumers. It’s not good families, it’s not good for business, it’s not good for the economy,” Mr. Aronhalt said.