US retailer offers discount ahead of tariffs

Global Business

Appliance Factory and Mattress Kingdom prides itself on the deals and discounts it offers its customers.

“We call it real savings here in our organization to the consumer,” said Kevin Drako, Appliance Factory’s Vice President of Corporate Operations. “And we really like giving those real savings.”

But Drako said real savings are going to be a little harder to come by soon. Because prices on appliances at the company’s 18 stores are about to go up.

CGTN’s Hendrik Sybrandy reports.

“You’re not going to find the (same) pricing of appliances (as) today and that could be as soon as tomorrow,” he said. “We’re right at that point.”

In January, the U.S. imposed 20 percent tariffs on imported washing machines, an attempt to protect American appliance manufacturers like Whirlpool. Now, having reached a threshold of 1.2 million imported washers, those tariffs are about to jump to 50 percent. Products made by foreign manufacturers like Samsung and LG Electronics have already gone up in price and will become costlier still.

“No matter what, there’s going to be a price increase to the consumer,” Drako said.

Now Appliance Factory is trying to turn lemons into lemonade. It’s conducting a pre-tariff sale with as much as 40 percent off its appliances. “Buy the washer, get a free dryer,” reads one ad.

“No, I’m not surprised,” said Alexander Padilla, who teaches economics at Metropolitan State University of Denver. He said pre-tariff sales could help consumers from being blind-sided by price hikes. “One of the secrets of profits in the long run is to build a reputation of being a fair, honest salesperson.”

“At the end of the day we thought, wow, if this is really who we are and what we stand for we need to give the consumer a heads-up,” Drako said.

Give them a reason, he added, to make a purchase they might otherwise postpone. Appliance Factory increased washer imports to keep prices steady this summer but worries the tariff may cause supplies of these products to run low. Many consumers may be unaware of all this. Shoppers we spoke with don’t seem worried about the current trade disputes.

“I’ve heard about it but I’m not really up on the news and the other stuff,” said LaVonne Mrazik, who was hunting for a new refrigerator. “That’s my husband’s job.”

“The people that work 8, 12 hours a day, they don’t have time to think about that,” Padilla said.

Drake said he’s a free trader at heart.

“Oh you’re going to tariff me, I’m going to tariff you,” he said. “Well, if you’re going to tariff me, I’m going to tariff you more. I don’t like it. I don’t think it’s good for the economy.”

He predicted consumers will inevitably experience some sticker shock when the tariffs really kick in. He wants to avoid giving them any unpleasant surprises and make a few bucks while he’s at it.