As tariff uncertainty and inflation continue to affect pricing in the beauty and personal care sector, new findings suggest consumers are prepared to adjust their spending, but not all categories face the same level of scrutiny.
“While 36% of US consumers plan to cut back on beauty and personal care purchases if prices increase, the majority are looking first to cut from other categories such as home goods (54%), apparel (53%), and electronics (50%),” Viki Zabala, Chief Marketing Officer at First Insight told CosmeticsDesign US, citing data from the consumer-led insights platform’s recently released whitepaper “Tariffs & Trust: Why Retailers Risk Loyalty with Price Hikes.”
This pattern could signal that beauty and personal care items may still hold value as small indulgences, but they are not immune to cost sensitivity. According to Zabala, “Brands will likely have to increase prices in some capacity, but it doesn’t and shouldn’t mean they need to make blanket price hikes across their entire catalog.”
She emphasized the importance of understanding product-level elasticity and noted, “They should engage directly with consumers to understand which of their products will be most sensitive to price increases...and those products where a price change won’t necessarily be a deal breaker.”
Communication and loyalty strategies key to managing price increases
With many executives ranking price increases as a primary response to tariffs, second only to changes in sourcing, brands must approach these decisions with caution and strategic clarity, the whitepaper urged.
“Tariffs are out of brands’ control,” Zabala clarified, “but what brands can directly influence is customer loyalty, even if they raise prices.”
The whitepaper identified two top consumer expectations when prices rise: transparent communication and value-adding efforts.
“Consumers say that the top two actions brands can take to offset price changes are: 1) clear communication, especially around why prices are rising. And 2) introduce new efforts to soften the blow, including offering loyalty points or discounts,” she explained.
She added that understanding product-level pricing tolerance is essential: “If a shower gel has room to absorb a lower cost but a shampoo product does not, then focusing on the former when it comes to pricing is the winning strategy.”
Cautious inventory planning shifts holiday innovation tactics
Amid reduced Q4 inventory commitments, brands are modifying their seasonal strategies to manage risk while still driving holiday engagement.
“We’ll likely see less new products from beauty and personal care brands as we enter Q4, and more of a focus on their top performing products,” said Zabala. She pointed to bundled offerings and refreshed packaging as lower-risk alternatives to launching entirely new products.
“This could mean more gifting bundles of brand best-sellers or limited edition drops of viral products with new packaging or variations,” she illustrated.
The retrenchment is also expected to slow innovation timelines, she explained. “R&D budgets are getting trimmed and ingredient or packaging shortages extend the pathway to market,” she noted.
However, she added, “Smart brands will still find ways to innovate through strategies like seasonal scents, collector packaging, or curated sets.”
Building supply chain resilience through diversification and transparency
To mitigate future disruptions, the whitepaper noted how brands are reassessing both their supplier networks and geographic strategies.
“One of the most critical steps beauty and personal care companies can take is to diversify their suppliers,” said Zabala. “Now is the time to grow that network [in order] to have back-up suppliers, and back-ups for those back-ups.”
Some companies are also exploring nearshoring and reshoring options. “Moving manufacturing, or at least parts of the process, closer to where the demand signal actually is, could be a major competitive advantage,” she explained.
Companies are also evaluating new markets to reduce tariff exposure and build long-term flexibility. “We’re also seeing companies evaluate new countries to enter as a hedge against US tariff risk, particularly across Europe and the Middle East,” she added.
Regardless of behind-the-scenes adjustments, shopper expectations remain constant. “Shoppers still demand speed, availability, and quality,” she shared. “Meeting these expectations means having the right systems in place, whether that’s proactively communicating delays, offering thoughtful alternatives, or incentivizing purchases.”
Strategic planning hinges on consumer data and scenario modeling
Looking ahead, proactive scenario planning and customer engagement will be critical for both brands and suppliers.
“Suppliers and brands should continue to closely communicate with their consumers to determine which prices are more elastic than others,” Zabala advised. She recommended using that data to shape pricing, inventory, and marketing strategies. “They should use this feedback to model future pricing scenarios and determine what their customers’ pricing thresholds are.”
Aligning inventory with real consumer demand can also protect margins. “By connecting with their shoppers and making decisions aligned with what shoppers will actually purchase, suppliers and brands can reduce overstock,” she added.
She concluded with a call for future-focused thinking: “They should also use this moment to look ahead and invest more resources in planning for the future...to better prepare for ups and downs in the market and maintain strong consumer loyalty.”
