Retailers May Choose Local Suppliers as Oil Rises, PwC Says

(Bloomberg) — Global retailers may cut orders from China and India and source more goods locally in developed markets because of increased energy and transportation costs, PricewaterhouseCoopers said.

Companies from supermarket owner Tesco Plc to jeans maker Levi Strauss & Co. are forging partnerships with local producers to reduce shipping expenses, ease environmental concerns and improve quality, according to “Global Sourcing: Shifting Strategies,” a study by the consulting firm released today.


Crude-oil futures have more than doubled in the past year, reaching a record $139.12 last week, while ship-hiring rates are near a record. Soaring food prices and quality scares are also prompting companies to find reliable suppliers closer to home, the study said, while less than half of the executives surveyed by PwC said they felt in control of product-safety risks.

“The price of oil increased monstrously in a short period of time, and retailers are beginning to feel the pinch,” said Annie Girac, a retail analyst at Paris-based insurer Euler Hermes SFAC. “If it stays this high I wouldn’t be surprised if retailers moved to local suppliers.”

Bloomberg