Beyond tariffs: Navigating retail in the age of disruptions

Apr 30, 2025 • 4 min

When the latest round of tariffs hit retail supply chains, manufacturers of private-label goods for large retailers noticed something unexpected: consumers weren’t just avoiding name brands anymore. They were also pulling back on purchasing even the cheapest alternatives.

It signaled a fundamental shift in retail economics that requires a complete rethink of how we connect supply chains to store shelves.

Embracing constant change

When we talk about tariffs, we’re discussing one sign of a broader reality: Disruption is the new normal in retail operations. The State of Supply Chain 2025 report reveals that consumer demand volatility (along with global events and rising tariffs) continues to rank as the top challenges facing retailers today.

Further, these disruptions rarely occur in isolation. They compound, creating ripple effects throughout the entire supply chain. To keep up and even get ahead of disruption requires technology with the ability to model multiple scenarios simultaneously.

When tariffs increase costs on certain product categories, only predictive analytics can immediately forecast the impact on demand, margins, and space. This allows retailers to make proactive adjustments rather than reactive ones, preserving both profitability and customer satisfaction.

Machine learning algorithms can pick out subtle patterns in consumer behavior that are invisible to human analysts. By analyzing factors like purchases, purchase frequency, and price sensitivity across thousands of SKUs, retailers have the power to predict which products will maintain demand despite tariff-related price increases and which will see significant volume reductions. The unified platform’s intelligence allows for strategic assortment decisions that protect both revenue and margins.

By analyzing purchases, purchase frequency, and price sensitivity across thousands of SKUs, retailers have the power to predict which products will maintain demand despite tariff-related price increases and which will see significant volume reductions.

Stay flexible and thrive

Retailers’ responses to tariffs reveal important insights about who is positioned to win in this new economy. Smaller retailers are at a disadvantage when it comes to their bargaining power and rarely have the financial capital needed to absorb the costs of tariffs as they arise.

In these same circumstances, the off-price retail sector benefits. TJX Companies, owner of Marshalls and TJ Maxx, sees a silver lining in tariffs due to its flexible business model: TJX buyers work backward from the retail price, selecting products based on discount potential rather than being tied to specific suppliers affected by tariffs.

What technology enables, however, is for all retailers to develop this kind of flexibility, regardless of size or business model. By leveraging real-time data capabilities, retailers can:

Rapidly model tariff impact scenarios: Analyze how different tariff levels will affect various product categories and automatically identify alternatives that maintain margins.
Implement dynamic pricing strategies: Use elasticity modeling to determine optimal price points that balance volume and profitability under new cost structures.
Create responsive supplier diversification plans: Identify potential supply chain risks and proactively develop alternative sourcing strategies, prioritized by risk level and business impact.

The technology imperative

The retailers experiencing the greatest strain are those still operating with disconnected systems and siloed data. When supply chain planning happens separately from merchandising decisions and space planning, the result is inevitable: increased waste, reduced availability, and declining customer satisfaction.

A unified platform integrates all the moving parts. When your supply chain is speaking to your space plans as well as price and promos, you’re able to reduce excess stock and maintain the labor needed in the DCs and stores to manage that stock.

By connecting forecasting, replenishment, space planning, and pricing within a single system, RELEX enables retailers to:

Create tariff-aware space allocation: Automatically adjust planograms to reflect changing product margins and anticipated demand shifts due to tariff impacts.
Implement intelligent inventory positioning: Use ML algorithms to optimize inventory levels across the network, accounting for tariff-induced changes in lead times and costs.
Develop data-driven assortment strategies: Leverage predictive analytics to identify which products should be maintained, substituted, or discontinued based on tariff impacts and consumer demand patterns.

The right tools can transform challenges into opportunities for operational improvement, allowing retailers to maintain service levels while optimizing inventory and reducing waste.

Agility in action

For retailers looking to build resilience against tariffs and other disruptions, implementing an AI-powered unified supply chain and merchandising platform enables critical capabilities:

Predictive impact analysis: Use advanced analytics to model how tariffs will affect costs, demand, and profitability across your product portfolio, allowing for proactive rather than reactive decisions.
AI-driven space optimization: Create store-specific planograms that automatically adapt to changing economics, ensuring the most profitable use of limited shelf space as cost structures evolve.
Machine learning-powered demand forecasting: Account for how tariff-driven price changes will impact consumer behavior at the product and category level, maintaining accurate inventory levels despite shifting demand patterns.
Unified scenario planning: Test different strategic responses to tariffs — from price increases to supplier shifts to assortment changes — in a holistic environment that accounts for all operational constraints and customer impacts.

Operational efficiency gained through advanced technology translates directly to preserved margins despite increased product costs from tariffs.

Build resilience now

The retailers who thrive in the tariff economy will be those who leverage AI/ML technology to create truly connected operations. By implementing the RELEX unified platform, retailers gain the ability to see beyond individual disruptions and develop systematic resilience that turns challenges into competitive advantages.

In a world where tariffs represent just one of many potential disruptions, the most valuable technology isn’t just the one that solves today’s problems — it’s the one that builds the capability to adapt to whatever challenges tomorrow brings. An AI-powered approach to unified retail planning provides that foundation for long-term resilience and success.

Learn more about building long-term resilience in retail