How Tariffs Threaten to Prolong the Impact of Grocery Inflation

This article was originally published with the title “Grocery Inflation: How to Retain Customers in Challenging Times” on July 18, 2022. It was updated on April 15, 2025.

Just as inflation was appearing to ease, grocers and shoppers alike are bracing for new price pressures.

This time from tariffs.

Over the past few years, grocery prices have risen sharply. Driven by economic uncertainty and compounding food supply chain disruptions, this surge has tightened household budgets and reshaped consumer behaviors.

We’ve seen the results of this in our monthly eGrocery sales reports from Brick Meets Click: Shoppers, prioritizing cost savings, have gravitated toward larger retailers with the scale to offer consistently lower food prices, leaving regional and independent grocers looking for ways to remain competitive and retain their market share.

Now, just as inflation appears to be stabilizing, the U.S. has been thrust into a new period of pricing uncertainty with the proposal of sweeping global tariffs by the Trump administration.

These on-again, off-again trade policies target key international imports across produce, seafood, packaged goods, and more. It’s a diverse array of affected categories, but they all possess two commonalities:

1. They are essential to grocery assortments.
2. They strongly influence consumer value perceptions.

Analysts anticipate that while some pricing impacts—especially on perishable and fast-moving items—will be felt immediately, the full effect will ripple through supply chains over the next 12 months.

This uncertainty is only going to reinforce the consumer perception that grocery prices remain high, particularly when compared to low-price leaders like Walmart, who are better positioned to absorb tariff-related costs due to their scale.

As a result, consumers are going to continue to spend with caution: cross-shopping, seeking out promotions, switching to less expensive labels, and embracing strategies to stretch their grocery budgets further.

But this shift goes deeper than just price. Consumers are rethinking how they shop, what they buy, and where they choose to spend. 

To remain competitive, grocers must recognize that these changes are likely here to stay—and take proactive steps to align their strategies with a new consumer mindset.

Understanding Current Trends in Grocery Inflation

This has created a difficult environment for grocers in which they’re forced to balance the impact of tariffs on inflation while simultaneously addressing the shift in consumer behavior toward value.

Some of the most visible pricing impacts from tariffs will occur quickly, especially in highly perishable and fast-moving categories:

• Produce: Bananas from Guatemala and grapes from Peru now face 10% tariffs.
• Seafood: Vietnamese and Indian shrimp are both subject to a 10% tariff that could rise to 46% and 26% respectively this summer.
• Staple commodities: Coffee and sugar—already priced at near-record highs—are projected to climb even further. Specialty coffee beans, for example, could see price hikes of 10% to 35%.

As other tariff-related increases work their way through the supply chain, consumers will not only experience higher prices, but also reduced assortment and increased out-of-stocks. This puts regional grocers and independents—who typically operate with leaner supply chains and less pricing power—at a disadvantage.

While tariffs stand to make the most immediate and long-term contribution to grocery inflation, they’ll be compounding a broader set of challenges already shaping food prices.

These include:

Energy Costs: Fluctuations in energy prices have a direct impact on transportation and production costs throughout the food supply chain. While recent decreases in energy costs have provided some relief, their volatility remains a concern for retailers managing operating expenses.

Disruptions in the Food Supply Chain: Events like avian flu outbreaks or weather-related crop failures significantly impact certain categories, such as egg prices and produce costs. These disruptions not only cause short-term spikes but also contribute to long-term uncertainty for pricing and supply.

Commodity Price Trends: Agricultural commodity prices, like wheat and corn, can see substantial swings due to geopolitical events, changing global demand, or improved harvest conditions. These fluctuations ripple through the food system, affecting food prices at every stage—from farm to shelf.

Changing Consumer Demand: As we’ve already mentioned, shoppers are adjusting their habits in response to both price changes and broader economic pressures. Categories like premium meats or specialty products may see reduced demand, while more affordable alternatives and private labels gain traction.

How Consumers Are Responding

The result of the list above is that consumer perception will remain anchored in inflationary fears. 

Grocers should expect a deepening divide between perceived affordability of mass merchants versus regional grocers—and the resulting consumer behavior changes we already mentioned. 

These shifts are important for grocers to understand if they hope to retain shopper loyalty in this new environment.

Cross-shopping Across Retailers

Consumers are increasingly visiting multiple grocery stores, comparing food prices, and dividing their purchases among retailers to maximize savings.

According to the most recent US eGrocery Sales Insights from Brick Meets Click and Mercatus, 40% of eGrocery shoppers placed orders with both a grocery store and a mass merchants in October 2024. This behavior reflects a willingness to invest extra time and effort in finding the best deals, particularly on staple items or high-ticket purchases.

Planning Purchases Around Sales and Promotions

If we look deeper into increased cross-shopping, we learn that consumers are taking a more deliberate approach to their grocery shopping, using sales flyers and digital tools to plan their purchases.

By focusing on discounted items, many are building meal plans and weekly grocery lists around promotions to keep food prices manageable. We’ve seen this most vividly in the overall rise of eGrocery sales that have been driven by big discounts on annual subscription plans from the industry’s biggest players, which include massively reduced fees on delivery.

Switching to Private Label Brands

Private label products have become a staple in many households, as shoppers increasingly seek cost-effective alternatives to national brands. 

This shift reflects a growing willingness to trade down for perceived value without compromising too much on quality. However, consumers accustomed to relying on lower-priced private labels to manage grocery budgets may see this option becoming less effective or more expensive.  

Food supply chains involve multiple international inputs, making it challenging for grocers to precisely predict how tariffs will ultimately affect their private-label prices.

Other Consumer Responses to Rising Food Prices

In addition to shopping across retailers, channels, and labels, many consumers are turning to frozen and canned goods for their affordability, convenience, and extended shelf life.

Some households are taking even more proactive measures, such as growing their own fruits and vegetables. While this isn’t a universal solution, the trend confirms a deeper effort among consumers to regain control over food prices and reduce reliance on store-bought items.

What Grocers Can Do to Adapt

As shoppers continue to focus on value, regional and independent grocers have an opportunity to respond with strategies addressing the shifting behaviors identified above.

6 Ways for Grocers to Appeal to Customers Affected by Higher Food Prices

1. Greater Customer Engagement
2. Enhanced Loyalty Programs
3. Targeted Subscription Plans
4. Improved Private Label Offerings
5. Increased Focus on Perimeter Departments
6. More Data-Informed Decisions

That means grocers have to rethink their promotional models and shift promotions toward bulk purchasing discounts, extended savings offers, and strategic subscription-based models. Align promotions with perceived long-term value rather than short-term discounts to improve shopper retention.

And engage with customers at every step of their journey.

Greater Customer Engagement

Personalized offers and discounts are powerful tools for appealing to value-driven customers.

By using customer data to deliver tailored promotions, grocers can create a more meaningful shopping experience that resonates with individual needs.

For instance, offering discounts on frequently purchased items, creating meal deals that reflect prior purchases, or notifying customers on sales of products most-affected by inflation (like egg prices) can enhance loyalty and drive repeat visits.

This approach taps into the deliberate, value-focused behaviors that many shoppers have adopted, such as planning purchases around sales and promotions.

Enhanced Loyalty Programs

Loyalty programs remain a cornerstone of retaining shoppers, especially when they deliver tangible benefits.

The success of big players in the industry—such as their discounted subscription plans and free delivery perks—underscores how effective these programs can be in attracting and retaining customers.

Regional grocers can replicate this by introducing loyalty systems that provide real savings, such as personalized digital coupons and exclusive member discounts on high-demand items. These efforts not only appeal to cost-conscious shoppers but also foster a deeper connection to the store.

Develop Targeted Subscription Models

This approach to loyalty programs can be taken a step further.

Again, following the lead of larger retailers, regional grocery stores can introduce subscription-based models that offer consistent value without eroding profit margins. Monthly or annual membership plans with benefits like free pickup or exclusive discounts can provide a steady revenue stream while incentivizing customer loyalty.

These programs cater to a growing reliance on eGrocery services and capitalize on a customer’s willingness to pay for added convenience—particularly if the perceived value outweighs the cost of membership.

Improve Private Label Offerings

As mentioned earlier, private label products have been a traditional avenue for many shoppers looking to save money without sacrificing quality.

With supply chains for these products now uncertain, grocers must re-strategize private-label sourcing by prioritizing regional and domestic partnerships to minimize exposure to tariffs. 

Clear communication about quality and origin may help justify price changes and any availability issues while maintaining shopper trust.

Expand Prepared Foods and Perimeter Departments

With restaurants having many of these same issues, grocers can capitalize by including prepared foods and fresh options in their online platforms.

Ready-to-eat meals, prepackaged sides, and bakery products not only meet the needs of busy shoppers but also drive margins in categories less vulnerable to pricing competition. 

While center store categories will face increasing pressure due to tariff-driven cost increases and larger competitors like Walmart and Amazon, perimeter departments like produce, deli, and bakery can become differentiators for regional grocers.

As the health-conscious trend continues, investing in these areas provides an opportunity to deliver value and quality—two factors consumers are increasingly seeking.

Use Data to Drive Decisions

Customer data is the foundation of all these strategies, offering insights that allow grocers to act with precision.

From segmenting customers based on shopping habits to identifying the most effective promotions, data-driven decision-making helps ensure every effort aligns with shifting consumer preferences.

For example, analyzing purchasing trends can inform the development of targeted discounts, while understanding store-level performance can optimize inventory for top-selling private label items.

By leveraging analytics, grocers can respond dynamically to shifts in consumer behavior, strengthening their position in a rapidly evolving market.

Mercatus Provides the Balance Grocers Need

While all of the strategies listed above will provide grocers with greater flexibility to overcome fluctuations in food pricing and consumer behavior, there’s no getting around the fact that pricing uncertainty is a major issue. 

It’s also not helping matters that this is striking many of the key categories—like produce, seafood, coffee, and private-label products—that are critical to consumer perceptions of value.

As a result, grocery retailers must address a trio of complex, compounding pressures::

1. The perception of value-differential between themselves and mass retailers
2. The actual and immediate tariff-related price increases on fast-moving food items
3. The continuing impact of both of these factors on consumer behavior

Adapting to this new reality requires more than what traditional solutions offer.

It demands a cohesive strategy that integrates customer engagement, loyalty programs, and data-driven decision-making—all while maintaining operational efficiency and controlling costs.

This is where Mercatus can help.

Our all-in-one eCommerce platform is designed to empower grocery businesses, providing complete control over every aspect of your digital commerce operations. 

From enabling personalized shopping experiences that drive loyalty, to streamlining fulfillment processes for maximum efficiency, Mercatus equips you with the tools to respond to today’s challenges while building a foundation for future growth.

The coming months will test the grocery industry’s ability to adapt—not just to inflation, but to deep structural shifts in pricing, sourcing, and consumer expectations. Mercatus is here to help you rise to that challenge.

Contact our sales team today to learn how Mercatus can tailor these strategies to your operations, boosting sales, increasing customer loyalty, and setting you up for sustained success.