Tariffs may be the headline, but they’re only one part of the broader economic pressures forcing retailers to rethink how they operate, source and sell. Inflation, shifting global trade policies, consumer anxiety and supply chain disruption have created a volatile market environment that is impacting nearly every aspect of retail operations. In this high-pressure climate, retailers that act with speed, adaptability and precision can establish a competitive edge. Let’s take a look at some considerations and strategies to help you build a volatility-proof retail playbook.
Pressure at every link in the chain
The new tariffs present a significant challenge to supply chains. The sharp rise in Chinese exports in late 2024 – was likely a preemptive move by manufacturers to ship goods ahead of expected tariff increases. These kinds of surges ripple downstream, complicating everything from inventory planning to pricing strategy.
Simultaneously, retailers are contending with higher transportation costs, labor shortages and fluctuating input prices. The result is a supply chain under strain, where every inefficiency is magnified, and every cost increase threatens already razor-thin margins.
How are retail tariffs affecting consumers?
And this isn’t just a boardroom concern – it’s also hitting consumers hard. A PYMNTS Intelligence survey shows that 75% of consumers are concerned about product shortages, while 57% expect price hikes as a result of trade and economic disruptions. This sentiment is also reflected in the University of Michigan’s consumer survey, which reported a 19% decline in consumer confidence around buying durable goods – a sign that uncertainty is influencing big-ticket spending decisions.
Responding to retail tariffs with strategic resilience
Faced with these challenges, retail leaders are building resilience through a combination of short-term tactics and long-term transformation:
- Smarter sourcing and supply chain diversification: To reduce dependence on single-source suppliers in high-tariff regions, U.S. retailers may adopt nearshoring—particularly to Mexico—as a strategic alternative or as part of a hybrid approach that balances cost efficiency, supply chain resilience and global diversification. Retailers are also pursuing partnerships with Free Trade Agreement (FTA) countries to decrease import duties and increase flexibility.
- Inventory optimization: Retailers are carefully recalibrating purchasing cycles. Some organizations are buying ahead to hedge against future cost increases, and others are staying lean to avoid overstocking. The balance is delicate: forecast correctly, and you protect margins; miss the mark, and you risk markdowns that eat away at profits. Retailers must align their strategies to data-driven forecasting, market conditions and their specific business objectives.
- Operational efficiency and automation: To drive leaner operations, retailers are investing in AI-driven forecasting, robotic warehouse operations and streamlined logistics. Using tools like AI and RPA (robotic process automation) can help organizations reduce procurement costs, enhance speed and increase accuracy in everything from order fulfillment to demand planning.
- Tactical pricing decisions: Retailers need to assess what works best for their market, balancing profitability with customer retention.
The executive imperative: Lead with discipline and foresight
The most effective response to market volatility isn’t a single move. Instead, retail leaders need a layered strategy that considers every lever available to improve resilience and reduce exposure.
Building a layered strategy requires going beyond surface-level adjustments and digging into the core of the business. Steps to get there include:
- Reassessing every cost structure, not just those directly tied to tariffs or inflation
- Evaluating supplier relationships through a strategic lens
- Building financial buffers that allow for greater pricing flexibility
- Prioritizing investments that improve agility, efficiency and transparency
By following these steps, companies can identify and reduce inefficiencies across the board creating the financial flexibility they need to invest in innovation and respond decisively to disruption.
Agile technology is key
Technology has proven to be a driver of competitive differentiation, delivering customer experience advances like BOPIS and personalization and operational improvements around logistics and inventory management. Retailers that leverage flexible, modern IT systems will be better positioned to respond to demand shifts, recalibrate supply chains and make informed decisions based on clean data. Retailers investing in automation, AI and composable IT infrastructure are positioning themselves to outmaneuver slower-moving competitors.
A common barrier to IT agility is being locked into inflexible software vendor support models. Retailers relying on vendor software support for the mission-critical ERP systems that run payroll, HR, procurement and other vital processes often find themselves unable to quickly access new innovations without costly upgrades, lengthy implementations or operational disruption. In volatile times, agility is non-negotiable, and these rigid technology relationships can limit a retailer’s ability to respond swiftly and strategically to changing market conditions.
Looking ahead: Turning disruption into a competitive advantage
Market volatility isn’t a passing phase. It’s the new normal. And while the pressure is intense, it also presents a chance to sharpen strategy, rethink enterprise solutions and reimagine operational excellence. With more flexible and cost-effective ERP support options that enable rapid integration of new capabilities, retail IT leaders can uncover efficiencies and opportunities to cultivate a competitive advantage in a crowded marketplace.
Reducing the high costs of vendor software support and reinvesting those savings into innovation empowers retailers to self-fund transformation for the flexibility and speed they need to thrive beyond today’s unpredictable environment. However, this requires breaking free from vendor lock-in and embracing systems that empower innovation, not restrict it. When your tech partners can’t evolve at the pace your business needs, they become liabilities rather than assets. Freedom in your tech stack can become freedom in your business strategy.
The road ahead demands focus, flexibility and a willingness to evolve. The retailers who rise to the challenge won’t just survive. They’ll lead.
Key Takeaways
The Rimini Smart Path™ is a guided methodology that helps organizations self-fund and accelerate transformation while increasing returns on existing software and protecting future software investments. This approach can help retailers break free from outdated support models, reduce support costs, avoid disruptive upgrades and find solutions to thrive amid market uncertainty. Find out how we help retailers fuel growth and turn disruption into a competitive advantage.
