Consumer Reactions – Are Higher Prices Driving Customers Away?

Rising inflation and tariffs are driving up retail prices, forcing consumers to make tough choices. Higher costs on everything from apparel to everyday essentials are putting customer loyalty to the test and reshaping shopping habits.

According to the NRF, the proposed tariffs on six product categories alone (Apparel, Toys, Furniture, Household Appliances, Footwear and Travel Goods) would reduce American consumers’ spending power by $46 billion to $78 billion every year the tariffs are in place. 

The big question is : are consumers still buying, or are they pushing back? As retailers now face the challenge of balancing profitability with customer retention, the key to surviving this shift lies in understanding evolving consumer behavior and adapting strategies to maintain customer trust and spending. 

Find out how consumers are responding to price increases and three strategies to retain them.

How Consumers Are Responding to Higher Prices

1. Consumers are adjusting their spending habits and becoming more selective.

Many shoppers are trading down to more affordable brands and products, while high-ticket items are seeing slower turnover as consumers delay or rethink purchases. This means retailers that rely on premium pricing are feeling the squeeze as customers look for value over brand loyalty.

2. Customers are very price sensitive and demand for discounts.

Price sensitivity is at an all-time high: 52% of respondents to a new survey from First Insight said that rising costs, including tariffs, will “significantly impact” their purchasing behavior. 

Shoppers are actively looking for promotions, price matching, and seasonal sales before committing to a purchase. Retailers without a clear discount or value strategy risk losing sales to competitors offering better deals.

3. Shopping behavior is shifting as customers seek for options offering better deals.

Bulk buying is increasing as consumers try to save through volume discounts. Similarly, subscription models are gaining traction, with customers seeking price stability and convenience. Some shoppers are even turning to second-hand or resale markets to find better deals.

3 Strategies Retailers Are Using to Address Tariffs

1. Leveraging new pricing strategies to protect their margins.

Rising costs from tariffs are pressuring retailers to adjust pricing models while maintaining customer trust. Strategic adjustments like strong initial markups (IMU), tiered pricing, and bundling help protect margins without alienating customers. 

Understanding price elasticity in this process is key : identify products with inelastic demand (necessities and unique items) and adjust pricing on elastic ones.

Gradual price increases and transparent communication —highlighting product quality and value— help mitigate customer resistance. Expanding loyalty programs and offering exclusive discounts are also effective.

Most importantly, successful retailers are proactive, continually learning and iterating to adapt to their customers' needs.

2. Deploying inventory and vendor management tactics.

Effective inventory and vendor management are crucial for navigating supply chain challenges and reducing costs. 

Retailers are refining assortments by focusing on high-margin, best-selling products and leveraging real-time data to anticipate demand and avoid stockouts.

Building fewer but strong relationships with key vendors—especially those with reliable fulfillment and flexible terms—helps secure better pricing and minimize disruptions.

3. Boosting sales despite cost increases.

Driving higher transaction values and improving customer experience are essential for sustaining sales amid rising costs. Strategies like upselling, cross-selling, and bundling help drive average transaction value. Smart promotions—such as targeted markdowns and value-driven offers—can maintain customer engagement without sacrificing margins. 

Retailers are focusing on attention, connection and convenience : enhanced customer service and personalized follow-ups reinforce loyalty and keep shoppers returning despite higher prices. Some retailers are even incentivizing their staff with sales team contests to boost sales.

The Takeaway

Higher prices are testing customer loyalty, but retailers that adapt to shifting consumer behavior can maintain their competitive edge. By offering personalized value, improving the shopping experience, and leveraging inventory management systems and retail POS software to respond to market trends, retailers can protect both their margins and their customer base.

Need help navigating the evolving retail landscape? Get a free consultation here to find out how Management One’s inventory planning and POS solutions can help you stay competitive and drive customer loyalty—even when prices rise.