Retailers are snipping price tags and ditching discounts to keep up with tariffs

Between tariff policy back-and-forths, supplier negotiations, and wavering consumer demand, retailers’ pricing has been in flux. But now, the impact has begun to show itself in consumer pricing. The consumer price index rose 0.4% in August, and 2.9% year over year, the US Bureau of Labor Statistics reported last week. Apparel prices rose 0.5% in August, with categories like women’s outerwear jumping 4.4% month over month and 5.4% YoY.

Over the last two months, retailers have shifted from watching and waiting to making choices on how tariffs will impact their pricing strategies, Jacqueline Martinez, managing director and partner at Boston Consulting Group and former VP of pricing and promotions at Michaels and Pier 1 Imports, told Retail Brew.

To confront tariffs and changing shopping behaviors, many retailers are seeking agility in pricing, rethinking their approach to retail fixtures like physical price tags, while others are testing the possibility of ditching discounts. While the approaches may differ, they all have their drawbacks.

Split ticket: For apparel retailers, most products are made overseas and imported, so they’re “ticketed” (have a price tag attached to them) with the price set in stone in said country before they arrive stateside, Martinez said. Most prices on store shelves now, therefore, were decided six to nine months ago, but decision-making now for new arrivals isn’t so clear cut.

Martinez said some retailers are looking for ways to have more flexibility with these ticketed prices to be able to change them—up or down—once they enter the US to account for changes in tariffs, their talks with suppliers, and shifting consumer behavior. That means evaluating options to ticket products in the US rather than overseas or use signage in stores to indicate price instead of on-garment ticketing, she said.

“There’s more re-ticketing discussions in those categories than I’ve seen in a long time, because people recognize that it’s still an uncertain environment, and they need to create those levers,” Martinez said.

Last month, Retail Brew reported that Target and Walmart have allegedly been tasking their employees with removing perforated price tags from many in-store apparel items. Workers at both retailers claimed this directive was tariff-related, with one noting Target “can’t keep up with constant price changes,” though neither retailer would confirm this. Nearly a month since that story, consumers continue to post TikToks sharing torn-off price tags at Target and Walmart.

These strategy shifts aren’t easy to execute, Martinez noted. Ticketing stateside rather than abroad can be an expensive move, and the use of signs can be “operationally hard,” she said. Jeff Sward, founding partner of retail merchandising consultancy Merchandising Metrics, previously told Retail Brew that the latter practice can get “messy” if products aren’t put in the right place.

“There’s lots of reasons not to, but the reasons to do it are piling up,” Martinez said.

That doesn’t mean retailers are ready to go all-in on newer tech like electronic shelf labels, which many have been slow to adopt because they can get damaged or stop working fairly easily. And store apps that allow customers to scan barcodes to see pricing haven’t seen enough consumer adoption to be a worthwhile solution yet either.

“Retailers—especially ones that care deeply about how they’re perceived on value—are going to want to make sure their customers see them as being transparent, fair, and honest about the pricing,” she said, but if “uncertainty continues for another year,” retailers may change their tune and invest more in solutions that allow for pricing agility.

Full swing: Some retailers, meanwhile, are taking a bit of a different approach—leaning into selling products at full price to see how much consumers are willing to keep spending.

“We are making a full-court press and selling higher full-price sales than we have done in the past,” Harmit Singh, Levi Strauss’s EVP and chief financial and growth officer, said at the Goldman Sachs Global Retailing Conference earlier this month. Retailers like Ralph Lauren and Abercrombie & Fitch have also recently shared similar strategies, Reuters reported. Leaders from Under Armour and On have even spoken about raising prices simply due to the “pricing power” it has with consumers.

This strategy is “aspirational for a lot of retailers,” Martinez said. Retailers will have to sell through their inventory by the end of the season, so how much consumers buy will influence whether or not they eventually need to enact discounts.

“What they may intend to do right now may not be what they have to do in the season,” Martinez said. “Consumers will get a vote.”

This report was originally published by Retail Brew.