Retail nearshoring that pays: A risk-smart playbook

For Grant Thornton’s Lawrence Griff, Head of Retail & Consumer Brands, when considering nearshoring or split-shoring options, from an audit standpoint, what matters are volatility factors such as shipping costs, tariffs, or geopolitical instability. Those factors, more than proximity, directly affect margins, impairments, and financial health. Whether goods are sourced from Asia or closer markets, for instance, does not fundamentally alter the accounting process.

Griff said that investors, retailers and governing boards increasingly scrutinize disclosures about sourcing. “Given the turbulence of recent years, COVID-related supply disruptions, shifting tariffs, and fluctuating shipping costs, stakeholders want visibility into supply chains,” said Griff. “Governing boards are less interested in hindsight and more focused on preparedness: understanding what alternatives exist, what levers can be pulled, and what unintended consequences may follow strategic shifts.”  Boards, Eaton said, primarily want clarity on risk, financial upside, and the sustainability of proposed changes.

Instead of asking “Is nearshoring cheaper?” the question should be, “Does a mixed supply network deliver a steadier margin profile over time?”

Design the playbook through technology

Technology and M&A also can reshape supply chains, Eaton said, which can influence a choice to nearshore. Artificial intelligence and automation help reduce inventory without sacrificing service, while mergers or divestitures force network redesigns. Boards, in his experience, primarily want clarity on risk, financial upside and the sustainability of proposed changes.

Using technology to analyze supply chains means retailers can consider building a product-by-product sourcing map, for example:

• Speed-sensitive products such as seasonal apparel and fast-moving accessories can be sourced closer to demand to reduce markdowns.
• Stable, cost-driven items such as basic household goods can remain offshore, supplemented by regional sources.
• Regional assembly of bulky or heavy products such as furniture can cut freight costs and improve availability.
• Regulated or ESG-sensitive products such as children’s apparel and foods can be prioritized to jurisdictions with higher transparency.

Nearshoring or split-shoring often means operating in new jurisdictions, each with its own labor standards, environmental laws and customs requirements. That adds contractual and compliance complexity: more supplier agreements, more regulatory frameworks, and potentially multi-currency and multi-tax considerations.

To manage this effectively, companies should adopt “no-regret” compliance controls from the start:

• Map requirements up front: labor, environmental, safety, and country-of-origin rules.
• Build documentation into supplier onboarding: require origin proofs, certifications and audit readiness.
• Standardize audits across all suppliers, nearshore and offshore.
• Invest in traceability tools that extend to second- and third-tier suppliers.
• Phase expansion deliberately so compliance capacity grows with supply chain volume.

Compliance by design not only avoids fines, it also builds trust with customers and investors who increasingly demand transparency into sourcing practices. Near-demand supply chains can deliver real benefits under the right conditions, but they also can drive up costs if compliance is not well understood and managed.

Strategies to consider

Above all, Eaton said, decisions about shifting supply chains, whether nearshoring, reshoring or split-shoring, should not be made hastily or based solely on narrow factors such as tariffs or transportation costs. Retailers should take a holistic approach, one that integrates financial modeling, operational analysis, tax considerations and strategic alignment.

Nearshoring alone isn’t a retail strategy. But when it is part of a split-shoring portfolio, supported by risk-adjusted economics, rigorous compliance, and digital visibility, it delivers resilience and speed without sacrificing margin. The path forward isn’t reshoring everything. It’s reshoring smartly, selectively and sustainably. Retailers who act now will transform supply chains from fragile to future-ready.