Tariffs & Retail : Strategies to Protect Your Margins
In a recent webinar, Dane Cohen, Director of Retail Strategy at Management One, sat down with retail industry expert and Management One co-founder Marc Weiss to discuss real-world tactics for navigating tariff-driven cost increases.
From pricing moves to vendor negotiations and sales-boosting ideas, here are the three strategies for independent retailers to turn economic pressure into opportunity — using data, focus, and adaptability.
“There’s nothing like having these disruptors in history to realize that there’s always a win if you look for opportunities of success, rather than focus on the losses.” - Marc Weiss
Strategy #1 : New Pricing strategies That Protect Your Margins
When faced with rising costs, a retailer’s instinct is to absorb them — cutting margins to avoid passing prices on to customers. But that’s unsustainable.
For instance, price increases during Covid ranged from 23% to 30% at the retail level — and up to 60% in luxury — yet customers kept shopping. The key is not to underestimate your customer’s willingness to pay, especially when they see real value.
Here are actionable tips that you can implement to protect your margins :
Maintain strong initial markups (IMU%) to offset cost increases. If your COGS go up 10%, your IMU needs to follow.
Evaluate price elasticity: keep pricing firm on inelastic or exclusive items, adjust where volume is more sensitive.
Use pricing strategies like bundling, tiered pricing, or value-added offers to protect margins.
Implement gradual increases to avoid price shock.
Focus messaging on value over price: emphasize quality, service, exclusivity.
Use loyalty programs and psychological pricing to cushion increases.
Have a strong class structure so you know where price changes make sense—and where they don’t.
Ensure your team understands the “why” behind your pricing.
“The buyer’s job is to make sure that the people in the store are educated and understand why the buy was made and why it’s important, so that they have the words and music to sell it well.” - Marc Weiss
Strategy #2: Smarter Inventory & Vendor Management
When costs are rising, your inventory strategy becomes even more critical as every unit counts :
Go narrow and deep: focus on best-sellers and high-margin items.
Use sales data religiously: find out what’s trending and what isn’t. Fashion is about freshness — and the customer is always chasing what’s new.
Keep inventory moving: negotiate returns, markdown money, or swaps on slow sellers.
Consider private label or exclusive events (like trunk shows) to boost both margin and differentiation. Consider collaborating with allies to put it together if you’re a smaller business.
Refresh your visuals: move products around on the floor, update window displays and refresh your website.
“It’s one of the free ways you can really stimulate freshness and test!” - Dane Cohen
Vendors are crawling back to specialty retailers as department stores are not paying. Pay attention to your vendor management by :
Consolidating your vendor list: focus on those who perform consistently.
Building strong relationships: vendors are also navigating instability and will prioritize accounts that are loyal and reliable.
At Management One, retail experts advise clients to know their numbers. A good exercise to analyze your situation is to :
Run a POS report (2024 + YTD 2025) on units sold, total sales, receiving at cost and retail.
Do a break-even analysis : with rising expenses, what’s the minimum volume your business needs to hit?
“Knowledge is power. To know what fight to fight, we need to know what fight we’re fighting.” - Marc Weiss
Strategy #3: Increase Sales Without Sacrificing Margin
“Customers know they will be paying more for products so they’re going to demand better service. Don’t let them be disappointed — surprise them with how good you can be.” - Dane Cohen
With prices going up, your best defense is to focus on providing higher-value sales, stronger loyalty, and sharper execution :
Drive higher average transaction values by upselling, cross-selling, and bundling. Organizing team contests to boost engagement have also proven to be very effective.
Deliver standout service with personalized follow-ups (for example, ask your clients about their satisfaction regarding their last purchase or alterations) and build real connection to strengthen trust and retention.
Be smart with markdowns:
Don’t discount across the board but target slow movers.
Blend markdowns with full-price on the same rack.
Get creative with events and aim to create surprise by offering discounts such as “Buy 2, get 1 50% off”.
Key Takeaways
In face of uncertainty, Marc Weiss concluded that retailers should stay hyper focused on what really matters to stay competitive : “Entrepreneurs are builders. They should always be in the process of making things better.”
Three key takeaways to help retailers get started in face of tariffs were to:
Pick 3 strategies from those mentioned above, focusing on one each week until it becomes second nature, then moving on to the next.
Markdown inventory that is 90+ days old to create fresh energy and drive traffic.
Brainstorm with your team on what “Attention, Connection, and Convenience” mean in your store — and pick one to execute with clarity.
Need help navigating the evolving retail landscape? Get a free consultation here to find out how Management One’s inventory planning and POS solutions can help you stay competitive and drive customer loyalty—even when prices rise.