Many retailers have relied on the outdated retail inventory method (RIM) for over a century to evaluate inventory value and margins, despite its shortcomings. With fluctuating U.S. tariffs, there’s a stronger case for adopting cost-based accounting, which provides more accurate inventory valuation by reflecting actual costs. Experts indicate that RIM causes significant volatility in margins as it applies a broad ratio regardless of item-specific costs. Major retailers like Walmart and Target face challenges in assessing tariff impacts due to RIM, complicating inventory management and pricing strategies.

Source: https://www.supplychaindive.com/news/rim-retail-inventory-method-vs-cost-accounting-under-tariffs-Walmart/752339/