Here’s a piece of news that no retailer needs telling about – customer loyalty and satisfaction are both on the slide. And when consumers are asked why they’re not sticking to the same brands and what their beef with retail is right now, one word keeps cropping up again and again. Tariffs.
The numbers tell the story. The American Customer Satisfaction Index reported a 0.4% quarter-over-quarter decline in consumer sentiment in Q1 2025, marking a 1.3% drop year-over-year. That’s the first time since the COVID-19 pandemic that the index hasn’t shown any upward movement in four consecutive quarters.
According to the University of Michigan’s consumer sentiment index, satisfaction fell for a fifth straight month in May to reach a three-year low. Asked why they aren’t happy right now, shoppers cite – you guessed it – product shortages and price hikes linked to tariffs.
You could maybe dismiss a one-point-something-percent dip in customer satisfaction over 12 months as a blip, nothing in itself to worry too much about. But far more concerning are the findings of a recent survey by Wunderkind, which show that 2 in 5 US shoppers are now happy to abandon brands they’ve previously been loyal to for a better deal. According to the EY Future Consumer Index, price sensitivity is back to being the number one purchase consideration.
Retailers can ill afford a race to the bottom on pricing while their own cost pressures remain so daunting – not helped, of course, by the impact of tariffs. But if customer satisfaction and loyalty are on the line, what other choice do business owners have?
Value is a matter of perception
Vendors certainly find themselves in a tough spot when it comes to pricing right now. With input costs on the rise, it’s very hard to cut prices without destroying margins. But when customers say they are loosening loyalty to certain brands to find ‘a better deal’, that’s not purely about price. It’s about value. And good value comes from the whole package you offer customers – the service, the experience, the aftercare, the sense that you value them.
As a retailer, you control the perception of value your customers have in what you offer. And that’s because you are in control of the customer experience. Now is a great time to take a close look at everything that happens when a customer steps into your store, and the wider journey before and after, too. Think of it as a CX audit.
Are your displays attractive and eye-catching? Is your merchandising and store layout right? Can people find what they are looking for? What are wait times for checkout like? If they are too long, what can you do about it? Does your POS need an overhaul? All of these things contribute to customer satisfaction, and therefore to the perception of value.
Another essential ingredient is good communication. Honest, open communication makes customers feel valued and builds trust. Make it a two-way street. Regularly gather feedback from customers to hear what they want and show you care (and wherever possible, act on it). Then be upfront about where you are. If you can’t cut prices, or even have to raise them to offset extra costs, talk to your customers about it. See if you can find a compromise by offering additional payment or financing options. There are still ways to make a higher price feel like a good deal if you’re open, honest and strive hard to give your customers what they need.
Finally, good communication lends itself to that holy grail of high customer satisfaction and locked-in loyalty – personalization. The more you talk to your customers, you more you understand them, the more you can tailor experiences on a one-to-one level. And sure, a thorough approach to data gathering helps, too. Your POS system is definitely your friend in this regard. Again, be transparent about what data you are gathering, and why. Make sure your customers understand clearly the value to them of sharing their data with you.