Most US shoppers will ditch brands over price hikes: Report

Still, 83 per cent of executives plan to raise prices. Interestingly, nearly 80 per cent of consumers say they would feel more loyal to brands that absorb tariff-related costs instead, according to a report titled ‘Tariffs & Trust: Why Retailers Risk Loyalty with Price Hikes Study’ from First Insight.

According to First Insight, however, customers’ trust and loyalty is not solely a function of brands’ and retailers’ ability to preserve pricing when faced with market forces beyond their control. To maintain customer loyalty while navigating circumstances that put their margins at risk, 77 per cent of surveyed executives have preemptively communicated price increases directly with customers. For those retailers and brands currently planning to issue blanket price hikes, First Insight recommended they instead engage customers directly to gain insights on what they’d be willing to spend and what pricing would be a deal breaker on products across categories. The resulting insights can inform more nuanced pricing strategies.

Most shoppers say any price increase is too much, with 30 per cent reporting that even a slight hike would cause them to change their spending habits. Many are skeptical of brands’ motives—only 24 per cent fully believe tariffs are solely responsible for rising prices. Still, 54 per cent of consumers acknowledge that government policy, not brands, is ultimately driving the increase in costs.

Retailers that raise prices can still earn consumer loyalty by taking the right steps. The top two actions shoppers want are clear communication about why prices are rising and meaningful efforts to soften the impact, such as loyalty points or discounts. Notably, 79 per cent of consumers say they would remain most loyal to brands that fully absorb price increases rather than passing them on.

Holiday shopping is going to be different this year, according to 92 per cent of executives. Almost every executive foresees holiday shopping shifts, with only 8 per cent saying they aren’t expecting noticeable changes. Of those who expect challenges, their top 3 concerns are: Reduced consumer spending (56 per cent), shipping/logistics issues (53 per cent), and product shortages (40 per cent), First Insights said in a press release.

Consumers will be focusing on value this holiday season. Consumers expect that tariffs will influence how they shop this holiday season in three primary ways: They’ll use more coupons and promotions (50 per cent), spend less overall (49 per cent), and buy items based on price versus brand (44 per cent).

Some retail categories will be affected more than others. Shoppers listed the following three categories as the ones that they would cut back on first due to price increases: Electronics/tech (50 per cent), apparel/fashion (53 per cent), and home goods/furniture (54 per cent).

“We can hear shoppers’ voices loud and clear, and now is the time for retail executives to put what they’re saying to work,” said Greg Petro, CEO of First Insight. “While most retailers won’t be able to avoid raising prices altogether, unilateral price increases are a sure-fire way to lose customer confidence and trust. There are more informed ways of approaching pricing strategies and offsetting the burden on customers.”

ALCHEMPro News Desk (RR)