This Isn't 2022: Why the Old Inflation Playbook Is Costing Retailers Now

Many retail organizations feel like they have been here before. Costs rising. Margins under pressure. Consumers complaining about prices. The instinct is to reach for the same playbook that got you through the last crisis.

That instinct is understandable. It is also one of the most expensive mistakes a retailer can make right now.

The current cost-of-living crisis is not a repeat of 2022. The conditions look similar on the surface: elevated costs, squeezed margins, uncertain demand. But the underlying dynamics are fundamentally different. And the strategies that worked then are not just less effective today; in some cases, they are actively making things worse.

What Worked Then Won't Work Now

Cast your mind back to peak inflation. In the United States, the Consumer Price Index hit 9.1% in June 2022, the highest in four decades. In the United Kingdom, energy bills doubled. In Brazil, food inflation ran into double digits. Retailers responded largely by passing costs through. Price increases were broad and frequent. Consumers were frustrated but kept spending. Shoppers grumbled at the checkout and came back the following week.

That resilience gave many retailers a false sense of confidence. Now, they are scrambling to understand and respond to consumers fundamentally reshaped by years of elevated prices.

Consumers today know which own-brand products are just as good as the national-brand equivalent. They know which retailers offer better value on the items they buy most often. They have downloaded the comparison apps, joined the loyalty schemes and learned to shop the promotions. Their price sensitivity has not just increased; it has become structural.

The data makes this visible. Across the six largest European grocery markets, private label has reached a record 50% unit share — not as a temporary response to a crisis, but as a new baseline. In the United States, private-label unit share in food and beverage hit its highest point in over a decade. In Brazil, shoppers are moving fluidly between channels and formats in ways that would have been unthinkable five years ago. Retailers who are waiting for shoppers to return to pre-crisis habits are likely to wait indefinitely.

The Three Mistakes Retailers Are Still Making

Despite the changed landscape, many retailers are still running a 2022 playbook. These are the three most costly errors we see consistently across markets.

Blanket price increases. When costs rise, the temptation is to pass them through uniformly across the assortment. In 2022, this was painful but survivable. Today, it is a direct invitation for shoppers to switch. Consumers respond very differently to price changes on different items. Raising the price of a high-visibility staple costs you traffic and trust. Leaving margin on the table on lower-sensitivity items costs you profitability. A one-size-fits-all approach does both simultaneously.

Competitive matching without customer insight. Knowing what your competitors are charging is necessary. Automatically following their moves is not a strategy. The competitive landscape has shifted significantly since 2022. Discounters have gained share in virtually every major market. Online channels have grown. The competitors that matter most to your specific customer base may not be the same ones they were three years ago. Following the wrong competitor on price is worse than not following at all.

Indiscriminate promotion cuts. When margins are under pressure, promotional budgets are an easy target. But eliminating promotions across the board removes one of the most powerful tools available for building value perception. The right move is to eliminate ineffective promotions — those that drive volume on items that would have sold anyway — and reinvest in the ones that genuinely drive traffic and loyalty. In a market where every shopper is looking for a reason to feel good about where they shop, that distinction matters enormously.

The New Pricing Playbook

The retailers who came through 2022 strongest were not the ones who absorbed the most pressure. They were the ones who used it as a catalyst to build better pricing capabilities. The same opportunity exists now.

Getting your response to the current crisis right, at scale and in real time, requires more than a four-year-old playbook, limited data capabilities and manual pricing processes.

Our new guide, Pricing in the Pressure Zone: A Retailer's Guide to the New Cost-of-Living Crisis, lays out exactly what retailers need to do in response to today's market, and how to do it with speed at scale. It covers the full pricing playbook, from identifying where you are most exposed to translating your strategy into execution across your entire assortment.

If your organization is still relying on the instincts that worked in 2022, this is the place to start. Download the guide now.