How retailers, consumers can best approach the holidays
Retailers and consumers alike are being offered strategic advice ahead of an "unprecedented" holiday economic climate.
AI-powered pricing software firm Pricefx has laid out multiple retail strategies for the holiday season, including prioritizing inventory intelligence and demand forecasting, communicating transparently with customers about price increases, and adjusting holiday budgets to account for higher costs.
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“Retailers are taking an extremely cautious approach to restocking,” said Michelle Duffy, distribution industry advisor at Pricefx. “To manage this volatility, we’re seeing businesses hold less inventory, cut orders, narrow product lines, and extend payment terms by 5-10% through supply chain financing. The traditional playbook simply doesn't work in this environment.”
Pricefx’s retailer strategies include:
- Implement dynamic pricing capabilities to respond to tariff fluctuations Tariff-driven price changes are rolling out in phases throughout the holiday season. Retailers must be equipped to adjust pricing strategies multiple times daily in response to cost fluctuations, competitive moves, and inventory levels. Static pricing models will result in either lost margins or lost sales.
- Prioritize inventory intelligence and demand forecasting With unpredictable supply costs and constrained inventory, retailers need real-time visibility into stock levels, sell-through rates, and demand signals. Key Value Items identification is more critical than ever to determine which products warrant investment at elevated costs and which should be deprioritized.
- Communicate transparently with customers about pricing changes Consumers are aware of tariff impacts through media coverage. Retailers that proactively explain price increases and demonstrate value through quality, service, or alternative product offerings will maintain customer loyalty better than those who simply raise prices without context.
- Diversify supplier relationships and explore domestic alternatives Long-term tariff uncertainty makes supply chain diversification essential. Retailers should evaluate domestic manufacturing options, alternative sourcing countries, and supplier partnerships that offer more predictable pricing structures.
Pricefx’s recommendations for consumers include:
- Adjust holiday budgets now to account for higher costs Households should begin financial planning immediately, particularly for purchases involving vehicles, appliances, electronics, and clothing. Price increases are not temporary, and waiting for prices to decrease may be unrealistic in the current trade environment.
- Shop earlier in the season when inventory is available Reduced inventory levels mean popular items may sell out faster than in previous years. Consumers who wait until late in the season may face both higher prices and limited selection.
- Consider alternative product categories and brands As tariffs impact different categories unevenly, flexibility in shopping choices can yield significant savings. Retailers may offer competitive pricing on domestically produced items or products from less-affected supply chains.
“This holiday season is a test case for how retail adapts to sustained tariff pressures,” said Garth Hoff, senior director of industry strategy at Pricefx. “Success will require agility, transparency, and sophisticated pricing strategies. Retailers who can navigate this complexity while maintaining customer trust will emerge stronger, but those clinging to old approaches will struggle.”
Despite a challenging economic environment, a recent estimate from the National Retail Federation found that retail sales in November and December will grow between 3.7% and 4.2% over 2024, which translates to total spending between $1.01 trillion and $1.02 trillion.
