Despite knowing full well that customers will be furious, most retail execs are still planning to raise prices.
That’s the takeaway from a new report by First Insight, Tariffs & Trust: Why Retailers Risk Loyalty with Price Hikes, which reveals a huge gap between what consumers want and what brands are doing. The study found that 83% of retail executives plan to increase prices, even though 73% of consumers say they’ll be frustrated by it, and 68% of those same execs expect backlash.
The reasons are, of course, tariffs, inflation, and margin pressure.
According to the report, 79% of shoppers say they’d be more loyal to brands that absorb added costs, while 80% would walk away from their favourite brand for a cheaper generic if prices go up.
Thirty percent of U.S. shoppers say any price increase would cause them to change how they shop. Only 24% actually believe tariffs are the real reason for rising prices, suggesting deep scepticism that could undermine even the most carefully worded explanation.
Leverage Direct Consumer Feedback
Still, retailers aren’t operating blindly. Seventy-seven percent of executives say they’ve already started communicating price changes directly to customers, and many are considering other ways to soften the blow, like boosting loyalty rewards or offering timely discounts.
To help retailers make smarter decisions, First Insight recommends ditching the blanket hikes and instead using direct consumer feedback to guide price thresholds by category. That way, brands can maintain profitability without burning the bridges of consumer trust.
Greg Petro, CEO of First Insight, said: “We can hear shoppers’ voices loud and clear, and now is the time for retail executives to put what they’re saying to work. While most retailers won’t be able to avoid raising prices altogether, unilateral price increases are a surefire way to lose customer confidence and trust. There are more informed ways of approaching pricing strategies and offsetting the burden on customers. Customers are forthcoming about what they’ll spend, what they’ll buy and where they’ll tap out–retailers simply need to engage them and communicate what they’re up to every step of the way.”
The study is based on surveys with 306 U.S. retail executives and 1,120 American shoppers, and includes broader insights from over 3,300 respondents across the U.S., U.K., and EU. It also flags key trends for the upcoming holiday season, including:
- 92% of executives expect major shifts in holiday shopping behaviour
- Top executive worries: reduced spending (56%), supply chain problems (53%), and product shortages (40%)
- Consumers say they’ll lean harder on coupons, promotions, and value over brand loyalty.