For much of the past several years, the U.S. economy has followed a distinctly K-shaped pattern: Affluent consumers continued to spend freely on travel, premium products and discretionary purchases, while lower-income households struggled under the weight of inflation and rising everyday costs. But new consumer sentiment data suggests that divide may be narrowing — not because financially pressured shoppers are surging ahead but because higher-income consumers are beginning to pull back as well.
That shift could have major implications for retailers in the months ahead. According to Alvarez & Marsal Consumer and Retail Group’s Spring 2026 Consumer Sentiment Survey, even as income expectations remain relatively stable, consumers across income brackets are becoming more cautious, more value-driven, and far more selective about where and how they spend.
What makes this moment particularly challenging is that consumers are not simply “trading down” in the traditional sense. They are redefining value altogether.
The report found that shoppers continue to expect lower spending across nearly every retail category, except grocery, where inflation — not enthusiasm — is driving higher expected spending. At the same time, consumers are changing their behavior in ways that could permanently reshape shopping patterns.
In grocery shopping, for example, shoppers are increasingly willing to keep buying the brands they like while switching to lower-cost retailers. The percentage of consumers planning to maintain their preferred brands while shopping at less expensive grocers jumped from 16% in fall 2025 to 27% this spring.
Discounters and value-focused grocers have spent years improving store environments and assortment quality, and consumers are responding. More than 60% of surveyed shoppers said lower-priced grocers now match traditional retailers in cleanliness, assortment, navigation and speed.
Private label momentum is accelerating for similar reasons. Nearly 70% of consumers said private label products meet their dietary or lifestyle needs, while 68% rated store-brand quality as equal to or better than national brands.
The same dynamic is unfolding across the apparel and beauty sectors. Consumers are buying fewer items, simplifying routines and delaying purchases, yet many remain willing to “trade up” selectively when products deliver meaningful benefits. In apparel, fit, comfort, material quality and durability are emerging as the primary drivers of premium purchases. In beauty, shoppers continue to spend on categories viewed as functional necessities, such as skin care and hair care, while reducing discretionary purchases like fragrance and makeup.
The message for retailers is clear: Consumers are not rejecting premium products. They are rejecting products that do not justify premium prices.
However, perhaps the most disruptive finding involves artificial intelligence.
The survey found that between 25% and 41% of consumers already use AI tools at various stages of the shopping journey, particularly for product discovery, research and price comparison. Among consumers ages 18 to 44, 64% ask AI for recommendations, and two-thirds of those shoppers act on the advice they receive.
That could fundamentally reshape how consumers discover brands and assess value. Traditional loyalty advantages are weakening as AI makes comparison shopping faster, easier and more analytical.
Retailers entering the second half of 2026 are facing a consumer who is more pragmatic than pessimistic. Shoppers are still willing to spend, but increasingly only when retailers offer a convincing mix of value, quality, convenience and trust.
In many ways, the consumer is becoming harder to impress — and less willing to overpay for mediocrity.
