Even before the U.S. imposed tariffs on 90 nations, before putting a hold on some tariffs for 90 days, retailers began preparing for the impact they will have on the cost of imported goods. However, to account for the additional expenses on imported goods without alienating their price-conscious customers, they will need to adjust by adopting a variety of new strategies. In recent years, inflation-driven price hikes forced shoppers to become more strategic in their spending. Consumers have held off on buying big ticket items and embraced deal-hunting behaviors, from using retailer promo codes to joining cashback programs and coupon apps to waiting for big sales events.
This consumer behavioral shift to seeking value means that retailers must get creative – offsetting higher-priced products on everyday purchases while continuing to offer compelling value to their customers.
Reworking Promotional Strategies
Retailers should revisit their promotional strategies to keep customers buying even as costs rise. One option is shifting from high-low pricing models, which rely on frequent sales and discounts, to everyday low pricing (EDLP) strategies that offer consistent, lower prices. The EDLP approach builds customer trust and helps shoppers plan their spending more accurately.
However, EDLP-driven retailers can also face difficulties responding to increased costs from tariffs, because they have committed to maintaining stable pricing. Without the flexibility to introduce temporarily higher prices or add short-term promotions to stimulate sales, these retailers have little choice but to absorb the extra costs and face a margin impact. Walmart, for example, expressed caution regarding the potential impact of new tariffs on its profit projections for 2025.
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Product Bundling for Higher Perceived Value
To enhance perceived value, some retailers employ product bundling – offering multiple products or services together at a single price. Product bundling is a fairly common strategy used to enhance perceived value and drive sales. For example, bundling a high-demand item with a complementary product can justify a higher overall price point, possibly offsetting increased costs due to tariffs.
One retailer that excels at product bundling is Best Buy, which utilizes product bundling widgets labeled “Our experts recommend.” With this approach, customers can purchase a bundle of relevant electronics and accessories for a single price. Bundling simplifies the shopping experience and increases the average order value – without raising the price of individual items.
Supply Chain Reworking and Negotiation
Retail giants such as Target and Walmart can cope with tariff-driven cost increases by re-evaluating suppliers. At issue is maintaining market share while considering potential price increases that could alienate customers. These large chains also can negotiate price reductions with suppliers to absorb some of the tariff-induced costs. By leveraging their massive scale, these retailers aim to keep consumer prices stable. But suppliers, especially those operating on thin margins, may resist significant price cuts.
Another supply-chain tactic retailers should consider is shifting some of their sourcing to U.S. suppliers. Retailers also can modify their product assortments by focusing on goods sourced from regions less affected by tariffs, for example, exploring alternatives to China by looking at countries facing a lower tariff burden such as the Philippines. Walmart pledged to invest $350 billion in the next 10 years to encourage domestic production; this may be a model other mega brands will follow.
But if we learned anything during the pandemic, it’s that altering supply chains is not easy to implement, and it takes time. Retailers assessing supply chain modifications need to look at the big picture and plan to absorb costs now to maintain customer loyalty, while expecting efficiency gains and cost savings later.
Stocking Up
Anticipating tariff hikes, some retailers are stockpiling inventory in advance of tariffs. Research firm Sea-Intelligence found that general retailer inventories in January 2025 were $30 billion greater than what could normally be expected at that time based on trends. And retailers such as Costco and Williams-Sonoma, for example, reported placing larger orders and holding more inventory to hedge against rising costs.
While this strategy can provide short-term relief, it does carry the risk of the retailer being overstocked if consumer confidence leads to less sales. And investing in larger orders now to build bigger inventories means cashflow could be affected.
Enhancing Customer Loyalty Programs
According to retail business intelligence software provider Pricefy, loyal customers tend to be less price sensitive. With that in mind, a strong loyalty program can act as a buffer against price sensitivity. Retailers with loyalty programs can consider strategies to both increase loyalty membership as well as increase participation among existing members.
Even in the face of tariffs, the basic principles of loyalty programs still apply: keep programs simple, make benefits easy to access and deliver meaningful, personalized rewards. Strategies such as increasing the value of program points or offering tariff-related discounts to members demonstrate a commitment to customers and can encourage continued spending despite price increases.
Passing Costs to Consumers
Some retailers will find it unavoidable to pass higher costs on to customers through price hikes. In fact, several have publicly indicated that tariffs may lead to higher prices for consumers on certain items or categories, including Best Buy, Target and Walmart. Auto brands in particular expect to pass the costs of imported parts and vehicles to consumers. Even discount chains like Five Below and Dollar Tree, which (respectively) rely on imports for 60% and 40% of their inventory, announced they plan to increase prices on certain products due to tariffs.
While proactive, transparent communication from brands about the reasons for price increases can help maintain trust, these increases will undoubtedly impact sales volume.
Conclusion
Looking back to the smaller in scope 2018–2019 trade war, tariff volatility can linger and reshape sourcing, pricing and consumer expectations. As the tariff era looms, retailers will have to walk a fine line – offsetting rising import costs without losing price-conscious shoppers who are now accustomed to seek value after years of inflation. Brands can offset some of the blunt impact of tariffs by retooling strategies, from promotions and product bundling, to rethinking supply chains and loyalty program benefits. By using a combination of tactics, brands can adapt, survive and thrive in the short term while laying the groundwork for longer-term resilience.
Michelle Wood oversees the merchant network side of the Wildfire Systems platform. Her team builds productive partnerships with online retailers and affiliate networks, bringing them into the Wildfire platform and improving their incremental revenue opportunities. With over 16 years of experience in digital media, affiliate marketing and influencer media sales, Wood has worked with many of the world’s most notable enterprise ecommerce companies to acquire new and loyal customers and exceed revenue targets with positive ROI. Prior to Wildfire, she held executive positions with leading performance marketing companies including ShopAtHome.com and Coupons.com.
