In an increasingly unpredictable global trade environment, retailers and brands are being challenged to respond quickly and intelligently to cost fluctuations. Tariffs are one of many factors — along with inflation and supply chain shocks — that can introduce sudden margin pressures across the product portfolio. Egg pricing in recent years shows how quickly costs can shift when multiple forces collide.
Effective customer-focused pricing and promotion strategies that balance competitive pressures with cost fluctuations are key to managing margin pressures. The need for flexibility and intelligence is greater than ever. A purely reactive response — such as blanket price increases — risks alienating customers and damaging long-term brand equity. Instead, organizations need a more sophisticated, data-driven approach.
This is where AI and advanced pricing analytics come in. With the right capabilities, businesses can pivot quickly, test effectively, and make nuanced decisions that protect both market share and margins.
Here are five strategies that leading retailers are using to stay resilient in the face of cost volatility — and how data and AI power each one.
1. Know Your Company’s Key Value Items
Start by gaining enterprise-wide visibility into your key value items (KVI) — the products that define your brand in the eyes of the customer. These SKUs are typically highly elastic and competitive, and may also be directly affected by tariff shifts.
By mapping your tariff-exposed SKUs to your KVI list, you can focus your attention where it matters most. Use AI to monitor competitor prices and automate real-time responses on these high-stakes items. In some cases, a short-term price adjustment may be necessary to maintain competitiveness and manage perception — but only with clear visibility into consumer sensitivity and market dynamics.
2. Revisit Cost Assumptions and Promotion Guardrails
There are often hidden opportunities in your cost base. Work with vendors to reevaluate pricing on SKUs that may have gone unchecked. In some cases, your cost may even exceed competitor retail pricing simply because the item hasn’t been scrutinized in years.
At the same time, tighten promotional spend. Use elasticity models to identify where promotions are truly driving lift — and where they’re just eroding margin. Implement guardrails at the deal level to prevent over-discounting at the point of sale, especially on tariff-impacted products.
3. Diversify the Supply Chain
Avoid putting all your eggs in one basket. When possible, reduce reliance on countries targeted by tariffs and use multiple suppliers in different regions for the same product category. Simulate sourcing scenarios to identify optimal suppliers and countries mix.
4. Embrace Customer-Focused Bundling Strategies
Rather than treating each product as an isolated pricing decision, zoom out and analyze the customer’s total basket behavior. AI models that incorporate purchase patterns and customer lifetime value (CLTV) can help you cluster products into value-driving bundles that balance affordability and profitability.
Bundling also opens the door for creative promotional strategies — combining high-margin accessories with lower-margin staples, for example — that drive overall value perception while protecting margin.
5. Consider Regionalized Pricing Strategies
Demographics and price sensitivity vary dramatically across regions, especially in today’s post-pandemic economy. By leveraging localized insights, you can build pricing clusters that are both competitive and margin-efficient — rather than relying on one-size-fits-all pricing.
Advanced analytics can help you identify these clusters and track customer response over time. It’s not just about charging more in high-income areas — it’s about aligning prices with local willingness to pay, competitor positioning, and category role.
The Path Forward: Test, Learn, and Stay Flexible
There’s no single playbook for managing through tariff and trade uncertainty. What separates resilient businesses is not just the quality of their strategy, but the speed and intelligence with which they adapt.
Leveling up your pricing analytics — especially through AI-powered forecasting, competitive monitoring, and test-and-learn frameworks — will give you the agility to stay ahead of the curve. That means faster reactions, smarter pricing decisions, and more confident navigation of whatever comes next.
Need help navigating today’s business challenges? Reach out to explore how you can use analytics to adapt to an ever-changing landscape.
