Just when we thought inflation might be under control, a new wave of price increases could be on the horizon. This time, tariffs are changing the game, as the U.S. takes a different approach to global trade. New or increased tariffs would put supply chains under pressure and drive up costs across industries.
For brands, it’s the familiar and difficult choice between absorbing these added costs and shrinking their margins, or passing on price increases to consumers.
The stakes are especially high now, in a volatile market where U.S. consumer confidence has fallen to 4-year lows. It’s clear the impact of 2022’s 9% price increases (ONS, BLS) are still being seen, with price-sensitive shoppers planning to cut spending on several discretionary categories (McKinsey, Feb, 2025). Today’s digitally influenced consumers – who thoroughly research category options before making a purchase – will be more price-sensitive and cautious when making a purchase. Retailers will also apply pressure, seeking to maintain their profit margins and avoid losing price competitiveness.
Source: Profitero, 2023 The Digitally Influenced Shopper
Maintaining profitability without sacrificing retention will require an organization-wide effort to optimize marketing, assortment and supply chains in collaboration with retail partners. At the heart of this is continuously maintaining the right balance with pricing strategy.
Our latest research shows that, with a few exceptions, prices haven’t surged—yet. Check out our chart below for the details.
HINT: To view nuances in the data, you can remove any category from the chart by clicking the label in the legend; the scale adjusts automatically.
Index 100% = Average price in Sept ‘24, the lowest point of inflation
Over the next few months we’re going to be tracking prices across several key categories in the US & UK to try and spot the early signs of Inflation 2.0. We’ll be tracking data weekly but updating our tracker at the end of each month.
Staying on top amid potentially rapid economic shifts and inflation requires a strong operational foundation and data-driven planning. Here are some questions brand teams should ask themselves to gauge their readiness:
10 questions brands should be asking to help them thrive (not just survive) in a price-sensitive economy
- Are our assortment and operations optimized to drive profitability in a tough business environment?
- Which pack sizes in our category are earning the fastest online sales growth?
- How are our competitors optimizing their assortment to pass along price increases?
- What percent of our revenue is lost to operational issues that could be solved through automation (sales leakage, chargebacks, listing suppression, etc.)?
- If we raise prices, will our buyers switch brands? What about if our competitors raise prices?
- Are all retailers complying with our price increases? How quickly are they going into effect on the digital shelf?
- Do private label brands have a large footprint in our category, and at which retailers?
- Are price changes impacting our organic share of search? How about competitors?
- Do we have a plan and process to conquest competitors that lose price competitiveness or go out of stock?
- How can we leverage data—such as digital shelf analytics—to drive efficiencies?
In Summary
At Profitero, we’re no strangers to guiding brands through challenging environments. From thought leadership to comprehensive shelf data and cutting-edge automations, we’ve helped brands succeed amid inflation, private label competition, and much more. For a deep dive into strategies for navigating economic uncertainty, be sure to sign up for our webinar on May 13th.
Thriving amongst economic uncertainty: How digital shelf analytics can help drive profitable growth
In the face of tariffs, global trade wars and other ongoing economic challenges, it’s never been more important for brands to get the most out of their tech stack and partners move beyond data to decisions. This includes using digital shelf analytics to help you drive efficiencies and achieve profitable growth, even in tough times.
Click here to join the exclusive webinar to find out:
- Why digital shelf basics matter more than ever
- How to protect your market share and future proof your business against competitors
- How to use digital shelf analytics to drive efficiency