Navigating tariffs: Seven data-driven paths to retail success

Retailers face unique challenges that demand smarter, more strategic approaches to customer engagement and inventory management. While consumer spending patterns fluctuate, data-driven strategies can help retailers weather the storm, and emerge stronger.

Here are seven proven strategies that Lexer clients are deploying to help turn uncertainty into opportunity.

1. Break the discount cycle

Constant discounting is a slippery slope. While promotions drive short-term revenue, they can train customers to wait for sales and erode your brand value over time.

Develop a value proposition that resonates regardless of price point. By analyzing your customer data, you can identify which products maintain consistent demand without discounting and which customer segments respond to value messaging rather than price reductions.

Consider:

• Strategic full-price messaging that emphasizes quality and longevity
• Loyalty rewards that feel exclusive without devaluing your products
• Limited-time product drops instead of storewide sales events

2. Match inventory to full-price customers

Most retailers sit on inventory that isn't connecting with the right audience. Rather than marking down products that aren't selling, use customer data to identify which segments would value these items at full price.

By analyzing purchasing patterns, browsing behavior, and demographic information, you can match inventory to customers who are most likely to purchase specific items without discounts. This approach not only preserves margins but ensures products reach consumers who genuinely value them.

See how Mountain Khakis turned $600k worth of excess inventory into a +150% revenue boost.

3. Target groups with purchasing power

Consumer groups respond uniquely to economic changes. With the Lexer and Experian partnership you can utilize Experian Mosaic segmentation directly in the Lexer CDXP to match customers to their Mosaic groups. This helps identify which customers may be most resilient during economic ups and downs. 

Experian's sophisticated lifestage and lifestyle segmentation classifies households into distinct groups based on socioeconomic factors, allowing you to:

• Prioritize marketing spend toward higher socioeconomic groups with more stable discretionary income
• Adjust messaging to reflect the unique concerns of each segment
• Develop product strategies that align with the shifting priorities of your most valuable customers

Selective targeting ensures your resources focus on customers with available purchasing power, rather than segments experiencing constraints.

How to unlock customer insight with Experian Mosaic.

4. Cost reduction through segmentation

Marketing budgets often face scrutiny during economic uncertainty. Rather than broad cuts, a smarter approach is selective optimization based on customer value.

By segmenting your customer base by lifetime value, you can:

• Reserve premium content and higher-frequency communications for your highest-value segments
• Develop more cost-effective, automated journeys for lower-value customers
• Eliminate wasteful spending on unresponsive segments

This segmented approach ensures your marketing dollars concentrate where they'll generate the greatest return while reducing overall costs.

5. Identify hero products for acquisition

Every retailer has "hero products" that serve as entry points for high-value customer relationships. By analyzing purchase sequences among your highest-value customers, you can identify which initial purchases correlate with greater lifetime value.

Hero product analysis reveals:

• Products that consistently attract valuable long-term customers
• Natural cross-sell and upsell opportunities based on actual purchase patterns
• Optimal entry-point price ranges that convert browsers to loyal customers

Armed with this insight, you can prioritize inventory, visual merchandising, and marketing messages that highlight these crucial gateway products.

Four steps to acquiring high-value customers

6. Optimize ROAS with high-value lookalikes

Acquisition costs typically rise during economic uncertainty as competition increases for a smaller pool of active shoppers. To maintain efficient acquisition, focus your paid social and digital advertising on high-potential audiences.

By creating lookalike audiences based on customers who purchase your identified hero products, you can:

• Reduce customer acquisition costs by targeting prospects with higher conversion potential
• Increase first purchase value by attracting customers predisposed to purchasing higher-margin items
• Improve overall ROAS by focusing spend on audience segments with proven value
• Suppress current customers from paid social acquisition campaigns

This targeted approach ensures your acquisition budget works harder during periods when efficient spending is crucial.

7. Focus on high-margin profitable items

Doubling down on high-margin products can be essential for maintaining profitability. The key is to identify not just which products have the highest margins, but which high-margin products resonate with your most valuable customers.

By analyzing your product performance data alongside customer purchase patterns, you can:

• Identify which high-margin products have the strongest conversion rates across different customer segments
• Understand which products are less price-sensitive and can absorb potential tariff impacts
• Discover opportunities to bundle high-margin items with complementary products that increase overall basket value
  

With Lexer's CDXP, retailers of all sizes can implement these data-driven strategies through intuitive analytics, segmentation, and activation tools—creating resilient revenue streams and competitive advantages that persist through economic cycles. Speak with our team today to discover how Lexer can help your brand transform uncertainty into opportunity.