U.S. industrial real estate is booming as retailers rethink where inventory should live. Tariffs, delivery speed, and rising costs are pushing more brands to move fulfillment closer to customers, but that shift brings new challenges around customs, compliance, and visibility. Scott MacRae, CEO of Landmark Global, explains why localization is getting harder, not easier, and where companies are most likely to trip up.
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Supply Chain 24/7: Why are so many retailers rethinking where they keep inventory right now?
Scott MacRae: A combination of factors is driving localization, with tariffs among the primary reasons. Duty changes and stricter customs procedures over the past year have made traditional cross-border fulfillment highly unpredictable, especially for mid-sized brands with less margin for error. When shipments face higher landed costs due to tariffs or delays, inventory placement becomes a strategic decision rather than just an operational one.
Meanwhile, consumer expectations remain high. Our recent consumer survey showed that 68% of U.S. holiday shoppers are willing to pay more for guaranteed Dec. 24 delivery. As a result, brands and retailers are reevaluating inventory locations to balance costs and delivery speed to local markets.
Overall, rethinking inventory strategy is less about abandoning global sourcing and more about being agile and intentional about where fulfillment occurs amid economic and customer pressures.
SC247: When companies try to move fulfillment closer to home, what usually ends up being harder than they expected?
SM: What often catches brands off guard is the operational coordination needed, such as maintaining balanced inventory across warehouses and avoiding situations where one location is overstocked while another is constrained.
There’s also less room for error. Localized fulfillment typically means faster inventory turnover, so planning or visibility mistakes become apparent more quickly and are more costly to fix. Without robust systems and experienced partners, companies risk trading tariff exposure for increased operational risk and complexity, rather than truly simplifying their supply chain.
Scott MacRae
SC247: Where do you see companies getting tripped up most often when it comes to customs rules and compliance?
SM: While localizing operations has its benefits, brands still have to navigate different tax regimes, customs rules, and documentation requirements as inventory crosses borders upstream. Many companies underestimate how quickly small classification or valuation errors can compound when volumes scale, leading to delays, audits, or unexpected duty exposure.
Another issue in customs rules and compliance is fragmentation. When customs brokerage, transportation, and fulfillment are handled by different partners, gaining end-to-end visibility becomes blurred. Without a single source of truth, teams are often reacting to problems after shipments are already in motion, increasing compliance risks.
SC247: Splitting inventory across more local warehouses sounds smart, but what new headaches does that cause behind the scenes?
SM: While splitting inventory across local warehouses improves resilience and boosts presence in local markets, it can also introduce new complexities. For example, once inventory is distributed, brands must manage regional demand forecasting and tighten inventory management. But without strong visibility, it’s easy to end up overstocked in one market and undersupplied in another.
Returns and compliance also become more complicated. Because products don’t always return to the same location they were shipped from, this can create challenges for duty recovery, documentation, and inventory reconciliation. Transportation coordination and cost management can also become more complex, as moving inventory between locations can quickly reduce the savings that localization was meant to achieve.
As a result, companies should treat localized fulfillment as a network strategy, not just a real estate decision. To ensure complexity doesn’t become a cost, they must pair distributed inventory with integrated technology, customs expertise, and clear ownership across fulfillment, transportation, and compliance.
SC247: Everyone wants faster delivery and lower costs, but what do companies prioritize?
SM: Quicker delivery and lower costs are both priorities, with more than half (51%) of consumers cutting budgets due to international shipping fees in 2025, but in practice, they can pull in opposite directions. Speed drives up transportation and inventory expenses, while cost control usually means longer lead times and more consolidation. With tariffs and compliance adding uncertainty, those trade-offs are sharper than ever. The brands and retailers doing this well selectively use speed, reserving it for high-margin or time-sensitive products and optimizing everything else for cost and stability.
SC247: Are there certain types of products where local fulfillment works especially well, or where it’s been a struggle?
SM: Local fulfillment works best for industries with steady demand, higher margins, and strong customer expectations for delivery speed, such as apparel, electronics, toys, and beauty and personal care – all top categories that drive international purchasing, according to our survey.
In contrast, it’s often more challenging for bulky items like furniture or highly seasonal products like holiday decor, where carrying inventory in multiple locations can quickly erode profitability if demand forecasts are off.
SC247: For a company just starting down this path, what’s one thing you’d tell them to get right early before problems snowball?
SM: Gaining ownership and visibility should be the first priorities in localizing operations. This means having clear accountability across fulfillment, transportation, and customs, with a single view of inventory and landed costs.
Without this single view, most problems begin to snowball when companies localize inventory without aligning forecasting, compliance, and replenishment. If those aspects still operate in silos, brands can lose the ability to make proactive decisions and end up reacting to cost spikes, delays, or inventory imbalances. Ensuring that alignment is established early creates a foundation that’s much simpler and far less expensive to scale.
SC247: Looking ahead, how do you see localized fulfillment evolving over the next year or two as trade rules and customer expectations continue to shift?
SM: Localizing fulfillment will become the standard approach as tariff rules and customer expectations for delivery reliability and visibility evolve. Companies will increase investments in flexible networks supported by better data and forecasting, shifting their focus from simply being “closer to the customer” to being more adaptable and able to quickly reposition inventory as costs, demand, and regulations change.
Scott MacRae is CEO of Landmark Global.
