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CHICAGO – According to new analysis by global market research firm NielsenIQ, rising food prices remain the top concern for U.S. consumers, reshaping shopping habits. A staggering 64% of Americans plan to buy less food if prices continue to climb. Lower-income shoppers have been disproportionately affected, accounting for 44% of total store unit losses over the past four years.
As a result, trade-down behaviors are increasing, with consumers prioritizing promotions, discount retailers, and private-label products. Bulk purchasing and value packs are gaining appeal as households seek cost-effective ways to shop. According to NielsenIQ's The Changing Retail Landscape, retailers must adjust their pricing, promotions, and assortments to retain engagement and loyalty.
Beyond shifting consumer behaviors, retailers are grappling with rising operational costs due to supply chain disruptions, transportation expenses, and labor shortages. Many are turning to AI-driven pricing models and strategic promotions to balance affordability with profitability. Those who adapt effectively while maintaining a seamless shopping experience will emerge as industry leaders.
Consumer confidence dipped in December 2024 amid lingering economic uncertainty. Wage growth has helped some, but elevated unemployment rates continue to impact household finances, making affordability a key concern for 80% of shoppers. Lower-income households focus on budget-friendly essentials, while higher-income consumers are reevaluating discretionary spending. Retailers that offer a balance between premium offerings and value-driven pricing are better positioned to retain consumers.
Automation is transforming retail jobs and influencing consumer sentiment and spending behaviors. Trust and transparency are critical as shoppers seek brands that offer personalized promotions, flexible payment options, and loyalty incentives to ease financial pressures.
Boomers are playing a smaller role in retail growth, while Millennials and Gen Z are shaping the industry. Gen Z, in particular, is driving digital-first shopping habits, with 1 in 3 ordering groceries online weekly. Social media significantly influences their purchasing decisions, making social commerce a key opportunity for retailers. By 2030, Millennials and younger consumers will make up 67% of the U.S. population, emphasizing the need for digital-first strategies and sustainable practices.
Private-label brands are now a primary growth driver for 53% of retailers. Once seen as budget alternatives, they are evolving into premium and innovative choices. Consumers are increasingly open to private-label products, with 40% willing to pay higher prices. Retailers are expanding their offerings to include organic, plant-based, and sustainably sourced items, catering to eco-conscious shoppers. Some are even premiumizing private-label lines to rival national brands in quality and appeal.
Digital shopping habits are evolving, with 55% of shoppers using social media for purchases. The demand for seamless omnichannel experiences is pushing retailers to invest in home delivery, curbside pickup, and AI-driven customer engagement. Technologies like AR and VR are gaining traction, offering immersive shopping experiences. AI is also optimizing pricing, inventory, and customer interactions, making personalization and predictive technology essential for retaining shoppers.
Retailers face mounting margin pressures as price-focused chains attract a broader audience. Many are investing in private-label premiumization and leveraging AI for dynamic pricing and inventory management. The concept of value is shifting beyond low prices to include quality, convenience, and brand trust. Retailers are enhancing loyalty programs and personalization efforts to strengthen customer relationships.
Thorvardur de Shong
The retail landscape is evolving rapidly, requiring brands to stay agile amid economic shifts and technological advancements. Value-driven shopping, digital convenience, and personalized experiences are shaping the industry. Retailers that embrace AI, e-commerce, and private-label innovation will thrive. Success will depend on integrating seamless digital experiences, transparent pricing, and data-driven strategies to build long-term customer loyalty.
