NPD: The categories that will be most impacted by tariff increases are…

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NPD: The categories that will be most impacted by tariff increases are…

By Marianne Wilson - 09/09/2019
Products that consumers view as a “nice to have” but not a “necessity” are in for the biggest hit from the tariff increases.

That’s according to a report from The NPD Group, which found that buying decisions will be impacted less by household income or selling price and more by whether a product is considered a “necessity.” Accordingly, sales in men’s and women’s underwear, skincare, baby gear and automotives will be less impacted by price increases from tariffs as consumers consider them necessities.

Categories that consumers consider “nice to have” include bicycles, handbags, luggage, watches, games, televisions, and headphones. NPD Group said it is already observing sales reductions in some of the categories where tariffs were introduced in 2018.

The company noted that the average selling price of items in a category does not predict the consumer-reported potential for sales impact from price increases. High- and low-priced items appear in all category groups, regardless of the expected magnitude of the tariff impact. However, higher prices do correlate somewhat with increased odds of delaying a purchase.

“Consumer perceptions will determine the effect of tariffs on overall spending and the economy,” explained NPD chief industry advisor Marshal Cohen. “Consumers will balance price and value according to their preferences and needs, trading down or delaying inessential purchases. Marketers should watch price trends and analyze sales impacts to estimate impact on their portfolios.”

The report, Navigating Pricing in a Post-Tariff World, maps more than three dozen general merchandise categories against the relative potential impact of tariffs and offers insight into the effects of tariffs already enacted in select categories.