Consumer behavior: Value remains the priority

Cost pressures and value-driven consumers shape retail supply chains

Retailers and consumer goods manufacturers continue to face cost volatility across food, fuel, and imported inputs. At the same time, consumers remain highly value‑oriented, forcing retailers to balance price competitiveness with margin protection. These dynamics are reshaping merchandising, sourcing, and transportation strategies heading into peak summer demand.

The first months of 2026 reinforced that consumers remain highly price‑sensitive, increasing reliance on promotions and discounts.

• Retailers leaned on discounts to clear winter inventory and drive store traffic.
• Promotional penetration increased in April, with a larger share of assortments on sale.
• Average discount depth remains slightly lower than last year, reflecting ongoing margin pressure.

Why it matters

Promotion breadth—rather than deeper discounts—can attract value‑focused shoppers while protecting profitability. Flexible inventory positioning and responsive replenishment are critical as consumers shift demand toward promoted and lower‑cost items.

Iran conflict to push beef prices even higher

Live cattle futures traded for $2.51 per pound in the middle of April, the highest nominal price (not inflation adjusted) on record since futures trading began in the 1960s. Contract pricing has increased more than 25% during the past year as ranchers face rising costs and reduce their herds. The shift is driven both by longer-term trends and the impact of the Iran conflict on inputs.

Behind the numbers

• The U.S. cattle herd stands at its smallest size since the 1950s.
• Consumer demand for beef has held relatively steady despite lower production and higher prices.
• The price of ground beef reached its record high for the past 40 years in March, at $6.70 per pound, up 12% from last year. Beef steak was up 16% from a year ago, to $12.73 per pound. The U.S. Department of Agriculture predicts beef prices could rise another 10-18% before the end of 2026.
• Yet nearly 60% of farmers state their finances are worsening. Due to the ongoing Iran conflict, they’re struggling to afford the fertilizer and diesel fuel they need. The Middle East is a primary source of the type of oil that’s suited to be turned into diesel, which is why U.S. diesel prices have risen faster than consumer gasoline.

How the Middle East crisis exacerbates more than just fuel prices

• American agriculture is the biggest global importer of urea, a key ingredient for nitrogen-based fertilizer. Roughly one-third of the world’s urea supply comes from the Middle East, and half of global exports pass through the Strait of Hormuz. The strait’s closure has led to a steep price increase. At the end of February, the wholesale price of urea ranged between $460 and $480. Since the Iran conflict began, that price range has jumped to $520 to $620.
• The Middle East also holds massive amounts of key minerals for phosphate fertilizers.
• Among the most impacted groups are corn and wheat farmers, with fertilizer typically accounting for a 30-50% of their operating costs. Consequently, cattle feed prices are up, which in turn leads to more expensive beef.

What retailers should consider 

• Amid rising beef prices, grocery retailers and food manufacturers can capitalize on promoting alternative picnic foods, as consumers seek lower-cost alternatives.
• Food supply chains should maintain flexibility to accommodate changes in consumer demand, particularly on food items often paired with beef.

Tariff refunds: Recovery opportunities with constraints

Retailers and consumer goods manufacturers may benefit from U.S. tariff refunds now that the process to apply has been established, but eligibility is narrow.

• Only the importer of record that paid the tariffs may file claims.
• Companies relying on third‑party suppliers or distributors may need contractual cooperation to share refund benefits.
• Refunds are limited to recent or unliquidated customs entries, requiring timely review and submission.
• Claims must be filed through the Consolidated Administration and Processing of Entries (CAPE) program, which can be resource‑intensive for high‑volume importers.

For more details about tariff refunds and potential new tariffs, see the Trade Policy & Customs section of this report.

Bottom line

Retail supply chains are navigating a convergence of value‑driven consumer behavior, higher food costs, and an ever-changing trade environment. Success depends on flexible transportation strategies, disciplined inventory management, and rapid response to shifting demand patterns, especially as retailers balance promotions with margin protection.

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