Key insights
- While tariffs have largely affected non-food commodities in recent months, food prices continue to rise, affecting both grocers and consumers.
- Grocers can’t directly control tariffs, but they can implement tariff mitigation strategies. This could include improving inventory management, seeking domestic suppliers, and adding price protection clauses in contracts.
- Operational adjustments can also help grocers, including reducing general and administrative costs, improving employee scheduling, and analyzing cash flow.
Get strategies to reduce tariff impacts on your grocery store.
U.S. businesses and consumers continue to be affected by tariffs, which have increased costs for many imported goods. While consumers face price hikes across various sectors, grocery prices have climbed at a slower pace.
Still, grocers must implement tariff mitigation strategies to maintain competitive pricing, uphold product availability, and protect their bottom line. Take steps to address these challenges, so you can better serve your customers and sustain your grocery businesses.
How could tariffs impact food prices?
The impact of tariffs on food prices is real: according to the U.S. Economic Research Service, food prices rose 23.6% from 2020 to 2025, outpacing overall inflation of 21.2% during the same period.
These increases stem more from inflationary pressures than tariffs alone. Importers of non-food items have often offset costs by renegotiating with overseas suppliers or adjusting pricing strategies. For grocers, however, the situation is more complex.
How are tariffs impacting grocers?
Unlike other retailers, grocery stores can’t stockpile perishable goods to hedge against tariff changes. This limits their ability to absorb sudden cost increases.
So why haven’t grocery prices surged as dramatically? Several factors help explain this:
- Some imported goods remain exempt from tariffs
- Export reductions from tariff-affected countries have lowered average tariff rates
Still, consumers are feeling the pinch on specific items like coffee, tea, avocados, tomatoes, and spices. The Consumer Price Index shows grocery prices up 2.2% in July, compared to 2.7% across the broader economy, signaling tariffs could be gradually filtering through the supply chain. And many economists anticipate consumer prices could continue to accelerate through year-end.
Tariff mitigation strategies for grocers
While grocers can’t directly control tariff costs on imported goods, there are strategies to help mitigate their effects.
Analyze inventory and pricing
- Use demand forecasting and integrated inventory systems to reduce shrink and avoid overstocking high-cost, slow-moving items. Inventory management becomes more important in times of uncertainty.
- Explore alternative sources, like domestic suppliers or countries with lower tariffs. Analyze forecasting of freight routes and logistics costs.
- Negotiate contracts with price protection clauses to hedge against future tariff shocks.
- Streamline product offerings and promote private label brands, which often provide better margin control.
Strengthen vendor relationships
Suppliers understand the strain tariffs place on grocers. Have open discussions about cost-sharing arrangements so neither party bears the full burden. Short-term concessions from vendors can buy time to implement longer-term strategies.
Avoid knee-jerk price hikes
Immediate, across-the-board price increases risk alienating customers. Instead, consider gradual adjustments combined with loyalty programs, bulk discounts, and bundling strategies to maintain customer trust and traffic.
Prioritize cash flow planning
Weekly cash flow forecasting is critical during uncertainty. Projections should extend at least 12 months and be updated regularly to anticipate pricing adjustments, manage liquidity, and maintain profitability.
Review operating expenses
Control what you can:
- Review general and administrative costs, payroll, and non-essential spending.
- Compare actuals to budget and identify trends for cost-saving opportunities.
- Analyze labor scheduling to reduce one of the largest P&L expenses.
Communicate with customers
Transparency builds trust. Highlight efforts to keep prices fair and emphasize local sourcing initiatives. Promoting regional products not only mitigates tariff exposure but also resonates with consumers seeking fresh, sustainable options.
How CLA can help grocers with tariff mitigation strategies
While grocers can’t control tariffs, they can help reduce their impacts by implementing cost savings and other mitigation strategies. CLA’s tariff team has compiled more than 20 tariff mitigation strategies to consider helping reduce costs.
Armed with more than 20 strategies for reducing tariff exposure, grocers can tap into new opportunities to help keep dollars and margins whole. Contact us for a custom tariff mitigation assessment to learn how you could improve your store’s bottom line.