How the middle east crisis can be a catalyst to refine and refocus

The global supply chain shocks as a result of the Iran conflict and Strait of Hormuz access restrictions will become increasingly apparent over the weeks and months ahead. For customers and retailers, the consequences will not be abstract or distant. They will be felt directly on shelves, in availability, and ultimately in household budgets. As with previous shocks, retailers will be the public-facing point at which geopolitical instability translates into everyday cost pressure for customers.

From the customer’s perspective, inflationary pressure that was beginning to abate will intensify again¹. Recent history suggests that, in these conditions, customers adapt quickly. They trade down, substitute brands, visit discounters more and become more selective about where they spend, with pressure greatest on those households already struggling with the cumulative impact of cost-of-living pressures.

Data-informed precision response

Retailers therefore face a strategic choice. Those that respond mechanically, passing through cost increases without discrimination, may protect margins in the short term but risk long-term erosion to trust and loyalty. The more effective response is to use customer insight with far greater precision: Understanding ‘substitutability’ when stock is constrained, protecting prices where customers are more sensitive or are least willing or able to compromise, and using segmentation and CRM to predict which customers may need greatest support and to deliver it to them.

During earlier periods of disruption, retailers that clearly identified critical products and moments for customers and took deliberate decisions to protect value in those areas, emerged in better shape once conditions stabilised. The lesson is not simply to absorb cost, even if that were sustainable, but to choose carefully where it is borne, always guided by customer need.

For retailers themselves, the challenge extends beyond the customer proposition. The broader retail ecosystem will be under significant strain. Manufacturers may seek price increases to reflect higher input and transport costs, while supply consistency will become harder to guarantee. Margin pressure and stock risk will rise together, placing further stress on already squeezed P&Ls.

Customer remains the north star

In this environment, securing volume becomes as important as managing cost. Supply chain operations will need to build up stock resilience and assess options for further efficiencies. Retailers will need to deepen joint business planning with suppliers, prioritise critical trading periods such as Christmas, and be more selective about where they deploy capital and space.

This is also a moment to think more deeply about options away from core - how can innovation be sustained, how can retail media and insight be used as levers with suppliers to win.

Periods of disruption, even acute events such as we are experiencing, expose what a business truly stands for. These endeavours are all in support of what should be a renewed focus on a simple principle: the customer remains the north star.

Retailers that stay close to their customers, support them through necessity rather than rhetoric, and manage their ecosystems with discipline and foresight will not avoid difficulty − but they will be better placed to earn loyalty that endures beyond the crisis.

Sources

• ¹IMF Global economy in the shadow of war, April 2026