Meet the New Consumer: Calculated, Skeptical, and Resilient

By Kyra Caruso, VP, Director of Strategy & Insights at H/L Agency

Six years ago, COVID came to our door and turned the world upside down, including how consumers spent their discretionary income. Relief funds allowed many to beef up their savings, upgrade household items, and splurge on things to make life at home their sanctuary.

The funds were discontinued, and inflation skyrocketed, but we just couldn’t break our spending habit. Home upgrades turned into trips abroad to catch up on lost vacations. Concerts and sporting events offered additional ways to get out of the house and enjoy life again. Eating out became the new norm even as restaurant prices increased by around 8%.

Currently, inflation remains stubbornly over the 2% target, and while consumer sentiment has improved since its historical May low point, it’s heavily determined by the Iran War and gas prices. 44% of consumers say they are worse off financially than a year ago, with personal savings rates at 2.6% –— their lowest since June 2022 — — as the growing cost of fuel and energy are driving consumers to use credit cards or dip into their savings.

And still, consumer spending habits cannot be broken. Retail sales stayed robust through 2025, but that growth is propped up by higher-income households. Their spending rose 2.6% versus just 0.6% amongst lower earners. To scratch that spending itch, consumers are becoming increasingly discerning about where their dollars go.

Increasingly, that scrutiny splits along a single line. There are essentials consumers refuse to “overpay” for, and non-essentials that make life feel fun that they will still stretch their dollars for. Both of these sides are heavily weighed when determining their monthly budgets.

81% of consumers are looking for value/affordability, and across all HHI’s, consumers are turning to private-label grocery brands and visiting discount chains like Dollar Tree, Kohl’s, and Walmart more often. Grocery carts are also seeing fewer items as another way to battle food inflation and shift budget priorities. Tellingly, part of this growth at dollar stores is coming from high-income households.

70% of consumers are also looking for health benefits in their food and beverage choices. If your brand is a bit more expensive but has proven health benefits, you are likely still pulling in sales, especially from higher-income households.

Those same households are stocking up on basics at the local dollar store to make room for the $200 they’d like to spend on a pair of Hoka running shoes. They would rather their hard-earned dollars go toward a product that actually performs. When joy-based spending must be rationed, the mid-tier stores they used to frequent must be cut.

Brands that exist in this middle ground are in the most danger of losing their consumer base, and 2025 already proved it. Walmart leaned into value and speed. ThredUp delivered on resale demands while the price of new goods skyrocketed. The brands that struggled were the ones overexposed to discretionary spending. Target endured 11 straight quarters of crawling sales as nonessential spending slowed. Beyond Meat suffered as consumers—and even large buyers like restaurants—were less willing to pay a premium for plant-based meat.

Value is the new baseline, even among affluent shoppers. To survive 2026 and beyond, the smart move is to pick a side of the spectrum and own it: brands must either be undeniably the best on price, or make their premium worth it through either performance or experience. The one position left with no defenders is the one stubbornly clinging to the middle ground.