More retailers and brands are evaluating the benefits of price cuts

Amid tariff refunds, shifting commodity costs, and a challenged, bifurcated consumer, retailers and brands are wondering—is the price right?

After several years of elevating prices, many are now evaluating the benefits of bringing them back down. Many food CPGs—including PepsiCo and General Mills, eager to jumpstart sinking unit sales—have reduced some of their prices over the last few months.

Several others, from retail giants like Kroger and Walmart to beauty brands like E.l.f. Cosmetics, have also reconsidered their pricing strategies as a lever to drive up velocities and attract—and keep—customers.

Dime Beauty, a prestige skin care and fragrance brand sold at Ulta Beauty, permanently dropped prices by an average of 20% across 17 of its SKUs on May 31. Consumers “feeling the pinch” of beauty prices was a contributing factor in the decision, Dime’s Chief Brand Officer Bernice Merlini told Retail Brew.

“We’re prioritizing that long-term brand trust and customer loyalty rather than short-term margin potential,” she said.

Nickel and diming: When Merlini, a former L’Oréal and Rare Beauty marketer, joined Dime late last year, she found its pricing strategy had become “siloed” with each new launch, with some not aligning with Dime’s “accessible luxury positioning.”

The company decided to drop market prices across several of its cleansers—a core category it sees as an “acquisition tool” but that customers can be price-sensitive to—to under $30, while all its serums are now under $40, Merlini said. Those thresholds were determined from benchmarking its pricing across both prestige and mass brands, she said.

Decreases ranged from 6% to more than 50%, or $2–$22, sourced both from operational efficiencies and margin cuts. Dime has discussed the move with Ulta Beauty for months, and will be communicating price cuts through in-store merchandising, Merlini said.

The brand hopes lower prices will drive volumes up, she said, but also that its set thresholds will serve as “guardrails” for pricing future products.

Dime follows several other recent beauty price cuts. In April, L’Oréal-owned It Cosmetics slashed prices across several products, including its best-selling CC+ Cream from $47 to $39, which it highlighted in a new ad campaign starring actress Isla Fisher. Last year, Estée Lauder’s Mac lowered its Studio Fix foundations from $44 to $39.

Speaking volumes: Selective price cuts is a strategy that’s been paying off for others. In April, PepsiCo reported its snack brands delivered volume growth in the first quarter.

E.l.f. Cosmetics’s move last August to implement a $1 price increase across its portfolio due to tariffs and inflation resulted in “a pretty big fall-off” in unit sales, CEO Tarang Amin said last month. To boost unit velocity, the company said it cut the price of its Halo Glow Skin Tint from $18 to $14, resulting in a 36% unit lift across retailers, and it’s now considering price cuts for other products.

And others are contemplating similar moves. Kroger CEO Greg Foran told Bloomberg the grocer was preparing to slash prices on thousands of products to better compete with Walmart. Meanwhile, Walmart CEO John Furner said last month the retailer has rolled back prices on 7,200 products.

Loaded price: As competition heats up, selective price cuts reflect many retailers and brands swapping “simplistic” pricing strategies—like basing prices on competitors or sticking to a certain margin rate—for more “nuanced” ones, Jacqueline Martinez, managing director and partner at BCG and former pricing exec at Michaels and Pier 1 Imports, told Retail Brew.

But Martinez noted that, for consumer goods brands, many price drops are a result of tariff refunds and lower commodity costs. Many brands have been holding onto their margins for 6–12 months before announcing price cuts, she said.

“I wouldn’t view it necessarily as this grand gesture to win customers so much as market pressure forced them there,” she said.

Those who are lowering prices should focus on key categories and products that matter to consumers, and be prepared to stick with the cut, Martinez said.

“The worst thing you can do is take prices down, and then take them back up three months later,” she said. “You’ll erode trust and margin at the same time.”