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Cost Price Increases: How to Win Over Retailers

  • Writer: itdev9
    itdev9
  • 12 minutes ago
  • 5 min read

Across the UK and Europe, branded consumer goods suppliers are under intense pressure. Input costs continue to rise—driven by inflation in raw materials, transport, energy, and packaging. Meanwhile, many retailers remain unwilling to accept price increases, fearing shopper backlash and erosion of loyalty. The result is a commercial standoff.

Recent data from The Grocer in the UK highlights the scale of the challenge: over 90% of suppliers have attempted to pass on higher costs in 2025, yet fewer than one in four have successfully recovered the full increase requested. Retailers are holding the line. One buyer summarised their stance bluntly: “Our job is to protect customers from excessive price hikes.”

But this resistance comes at a cost. If pricing pressures remain unresolved, suppliers may be forced to reduce investment in innovation, product quality, or supply chain resilience. Worse, some products could face delisting, weakening overall category performance.

At Accuris, we believe suppliers can avoid this spiral by reframing the negotiation—from a conflict over cost recovery into a shared opportunity to protect category value, shopper trust, and long-term margins.




Understanding the Context

Cost pressures are being driven by a combination of structural and cyclical factors:

  • Rising agricultural and commodity prices

  • Increases in labour, energy, and logistics costs

  • New environmental legislation (such as Extended Producer Responsibility in the UK)

At the same time, UK grocery inflation rose by 2.8% in May—marking the fourth consecutive month of inflation increases. And yet, retailers are doubling down on value positioning. The result? Two-thirds of suppliers report growing price competition among supermarkets and rising pressure on net margins.




Moving Beyond the Basics

While most suppliers understand the importance of presenting a clear cost breakdown and timing negotiations strategically, those tactics alone are no longer enough.

Here are eight advanced strategies—rooted in data, behavioural science, and commercial logic—that can help suppliers gain traction with even the most price-resistant retailers:


1. Segment by Willingness to Pay

Rather than applying a uniform increase across the board, suppliers can segment their pricing strategy based on shopper sensitivity. Conjoint analysis and econometric modelling help identify which consumer segments are willing to pay more—especially when there is a strong value story tied to sustainability, provenance, or pack format.

Retailers are more receptive when presented with evidence that some shoppers are price-resilient and that selective pricing can grow margin without harming loyalty.


2. Reframe Price Increases as Value Expansion

Retailers do not want to absorb supplier cost inflation—but they are open to category value creation. A price increase that enables portfolio investment, improved mix, or greater category penetration reframes the negotiation as a growth conversation.

Show how overall shelf value could rise, even if volumes dip. Emphasise how price change can unlock growth in premium segments or underdeveloped pack formats.


3. Quantify the Risk of Inaction

Retailers often underestimate the hidden costs of refusing an increase. Suppliers should model and communicate potential trade-offs clearly:

  • Lower-margin SKUs may be removed from the range

  • Promotional budgets may need to be cut

  • Service levels or delivery lead times could be impacted

By surfacing these risks in a constructive and professional way, suppliers can shift the conversation from price to supply chain continuity and long-term health.


4. Model Category-Level Impact

It is more persuasive to show how a price change affects the entire category—not just a single SKU. Modelling the impact on margin mix, value contribution, and competitive positioning makes it easier for buyers to see the bigger picture.

This approach transforms a defensive discussion into a joint strategy review.


5. Simulate Real Shopper Behaviour

Rather than relying on assumed shopper reactions, use behavioural modelling to simulate likely outcomes. Will shoppers trade down, switch brands, or remain loyal? What is the likely impact on own label?

Evidence-based scenarios de-risk the discussion and help both parties anticipate outcomes more accurately.


6. Optimise the Base Price–Promo Mix

Sometimes it is not about the list price. Rebalancing base pricing and promotional intensity can unlock shared value. For example, a modest base price increase combined with reduced promotional depth might improve net margins and simplify shopper pricing perception.

Accuris tools can model the promotional return on investment under different base price assumptions—helping both parties find a better balance.



Five Experimental Strategies That Push the Boundary

For situations where even the best logic does not get traction, here are five more experimental—but commercially sound—strategies designed to challenge the negotiation dynamic:


1. Inflation-Linked Promotional Guarantees

Offer to lock in promotional support over the next 6–12 monthsonly if the retailer agrees to the proposed price increase today. This approach gives the buyer predictability and removes planning uncertainty.

The message: this is not a one-off ask. It is part of a structured, forward-looking commercial plan.


2. Shared Shopper Trust Index

Retailers fear losing shopper loyalty. Suppliers can propose co-investing in a dashboard that tracks shopper sentiment, price perception, and switching behaviour—based on loyalty data, surveys, or third-party insights.

This creates transparency, shared accountability, and early warning if thresholds are breached.


3. Failure Rebate Mechanism

Propose a trial period where the price increase is tested against agreed sales thresholds. If results underperform, a trade investment such as a promotional offset is triggered.

This bold approach builds credibility and shifts the burden of proof from projection to performance.


4. Tailored Value Stories by Retailer Type

Generic arguments often fall flat. Instead, suppliers can create retailer-specific narratives that align with that retailer’s brand positioning.

  • For value-led grocers: focus on bulk formats and cost-per-use

  • For premium banners: highlight provenance, innovation, or ethical sourcing

  • For discounters: show how the proposed change protects their value price tier


5. Pre-empt the Margin Defence

Most buyers are trained to defend their margin. Suppliers can reframe the discussion by modelling and presenting how the retailer’s per-unit or total category margin is protected—even as the supplier absorbs cost pressure.

This approach highlights shared pressure and positions the supplier as a partner in solving the problem—not a source of it.




Conclusion

In today’s market, cost increases are unavoidable. But how suppliers approach the conversation with retailers makes all the difference. By combining rigorous data analysis with creative commercial thinking, suppliers can turn a pricing confrontation into a strategic collaboration.

At Accuris, we work with the world’s most trusted FMCG brands and fastest growing challengers to support data-driven price negotiations, category strategy, and promotional optimisation. If you are preparing for critical discussions with retail partners, our tools and insights can help you enter the room with confidence—and leave with alignment.

Let us know which of these strategies you are using—or explore how Accuris can support your next pricing cycle.

 
 
 

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