CSA Mentions First Insight | Survey: Consumers to Shift Loyalty to Brands That Absorb Tariff Costs
Incoming tariffs and associated price hikes could have an impact on brand loyalty.
Nearly seven-in-10 (68%) brand and retail executives expect a negative reaction to price increases from customers, according to a new survey from AI-powered retail platform First Insight. Seventy-three percent of consumers surveyed confirm they would be frustrated by price increases, and 83% of executives say they plan to raise prices anyway.
However, brands and retailers that don’t raise prices in the face of new import costs could see long-term loyalty increase. Nearly 80% of consumers would feel more loyal to brands that absorb tariff-related increases, while nearly three-in-four would abandon their favorite brand for a cheaper generic if retail prices rise.
A large majority of consumers (79%) say that they would be most loyal to brands that fully absorb the costs themselves. Nearly one-third of shoppers (30%) said that any price increases at all would cause them to shift their spending habits.
Shoppers listed the following three categories as the ones that they would cut back on first due to price increases: Electronics/tech (50%), apparel/fashion (53%) and home goods/furniture (54%).
Only 24% of shoppers say they fully believe that tariffs alone are the reason for rising costs. But despite their skepticism, consumers know that brands are not ultimately to blame for rising costs. More than half (54%) of consumers said that government policy is driving up costs.
“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 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.”
Additional survey insights include the following:
- Looking ahead, consumers expect that tariffs will influence how they shop this holiday season in three primary ways: They’ll use more coupons and promotions (50%), spend less overall (49%) and buy items based on price versus brand (44%).
- Almost every retail executive surveyed foresees holiday shopping shifts, with only 8% saying they aren’t expecting noticeable changes. Of those who expect challenges, their top concerns are: Reduced consumer spending (56%), shipping/logistics issues (53%) and product shortages (40%).
- Nearly three-quarters (73%) of retail executives said that they believe price increases will go into effect by the end of summer.
- The majority of executives (60%) said that if they raise prices, they expect to lose market share to competitors that don’t.
First Insight surveyed more than 3,000 global consumers and more than 300 retail executives for its report.
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