Five Retail Strategies to Navigate Impact of Tariff Talks
NEW YORK — With 2025 underway and a new administration at the helm, all eyes are on U.S. tariff policies. With consumers still fatigued by residual inflationary pressures, businesses will need to strike a delicate balance in managing forthcoming changes, seizing new opportunities and mitigating subsequent impacts on pricing and supply chains, wrote NielsenIQ (NIQ) in a new report.
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In "Time for Tariffs: What they could mean for business and consumers," NIQ collaborated with Yale economists Martha Gimbel and Ernie Tedeschi to explore the potential impacts of new tariffs, suggest strategies to prepare for them and offer solutions for remaining competitive in 2025 and beyond.
As it unfolds…
Given the unfolding nature of new tariff policies, businesses should be looking at a few places for direction:
Consumer Financial Health
Only 5% of global consumers stated they had not changed their shopping habits in response to current economic conditions like inflation. New shopping strategies included stocking up on deals (30%), switching to lower-priced items (36%) and focusing only on essential purchases (33%), NIQ's "Consumer Outlook: Guide to 2025" revealed.
The Competitive Environment
Brands that are domestically based but have international competitors will likely do well under tariffs as long as they don't rely on foreign inputs, NIQ wrote. Tariffs will amount to a forced price increase on their competitors. The domestic brands could therefore have space to raise prices.
In 2018, for example, domestic washing machine brands were able to raise prices even though they weren't affected by the tariffs on Chinese washing machines. However, margin room will ultimately be decided by the competitive environment and the health of the consumer. Highly competitive industries with many brands may still find little room to gain on margin.
Navigating the Path Forward
In addition to staying attuned to consumer signals, manufacturers and retailers should lean on strategic best practices for growing market share while softening price shocks and providing consumer value.
NIQ provided these five strategies to navigate the impact of tariffs:
1. Consider the capacity for price absorption.
When it comes to price increases, many consumers remain fatigued by inflation. If a business is affected by tariffs, companies should determine which costs the organization can feasibly absorb before passing increases on to the consumer. The same reasoning applies even to organizations that are not affected by tariffs but have competitors that are.
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"Your competitive advantage may lie in keeping pricing steady," NIQ wrote.
2. Ensure promotional structures are on point.
If price adjustments are necessary, then effective promotions can go a long way in easing consumer pressures and driving brand loyalty. Organizations should keep in mind that a successful promotional strategy shouldn't only drive value to the shopper but also deliver incremental volume.
"Ensure your promotions strike a balance between frequency and offer mechanics, regularly analyzing their significance with shoppers, their ability to drive sales and their sustainability as a business practice," the firm advised.
3. Offer the right brand, in the right pack, at the right price.
The last few years have proven that a brand's pricing power can change in a dynamic environment, and that value doesn't always signal the "least expensive" option for consumers. Studies have found that manufacturers who make both direct and indirect pricing changes — like optimizing SKU mix and price pack architecture — can have 8% better revenue performance than price increases alone.
"Challenge consumption moments with new formats and unexpected occasions to drive new opportunities along the consumer value spectrum," the collaborators wrote.
4. Recalibrate your value proposition and brand messaging.
Nearly two-thirds (62%) of global consumers say they would be willing to switch brands for a lower price. With new tariff policies poised to potentially exacerbate price fatigue, brands should rightly be concerned about defending their market share. But keep in mind the consumer say-do gap: Value is not rational; it's relative. It comprises memories and associations, emotional affinity and functional qualities, as well as absolute price. It can vary according to shopping trip, category and shelf alternatives, and even by time and location.
"Revisit your value proposition through the lens of both conscious and nonconscious drivers — and ensure your brand messaging provides the context consumers need to choose you," NIQ said.
5. Fulfill emerging consumer needs through innovation and renovation.
While new tariffs might impose new marketplace pressures, they will also present new opportunities to close emerging marketplace gaps. As policies roll out, it's important to take inventory of the current product portfolio and stay apprised of evolving consumer and category drivers. NIQ research shows that companies that grow innovation sales are two times more likely to grow their overall sales — meaning that continued innovation and renovation can be critical levers for gaining market share.
Chicago-based NIQ is a global consumer intelligence company. It combined with GfK in 2023, bringing operations to more than 95 countries, covering 97% of gross domestic product.