Consumers continue to be cautious as financial pressure persists, fundamentally reshaping the way they shop, spend and make decisions across categories.
According to a survey by Alvarez & Marsal’s Consumer Retail Group, consumers plan to spend less in every category except grocery — similar to fall 2025 — where spending expectations are likely lifted by inflation, rather than a desire to spend more.
The survey of over 2,100 U.S. consumers about their financial outlook, spending priorities and shopping behaviors, conducted in February, found that shoppers are increasingly making changes to navigate continued financial pressure such as shifting to lower-priced retailers, buying less volume, accelerating use of private label products, and leveraging AI tools to discover products and find the best value.
“Today’s consumers aren’t simply tightening their belts — they’re making thoughtful tradeoffs,” said Chad Lusk, managing director at A&M’s Consumer and Retail Group. “They’re cutting back on volume and dramatically changing shopping routines to stretch their wallets. At the same time, consumers are choicefully investing in products that deliver recognizable differentiation and value at higher price points. Whether it’s a premium grocery item with better ingredients, an apparel piece built to last or a beauty product that actually performs, consumers are buying less but expecting more.”
The survey showed that across categories, consumers are making deliberate behavioral shifts to stretch their wallets, resulting in a fundamental change in how they shop.
Among the findings, even as earning expectations hold relatively stable, consumers continue to plan to pull back on spending. This reveals a disconnect between confidence in their income and willingness to spend, and how far behind many consumers still find themselves. Grocery remains the only category where shoppers expect to spend more, prompting them to actively seek ways to manage spending. For example, consumers are shifting to lower-priced grocers over cheaper brands, with 27 percent planning to keep their brands but switch to a less expensive store, up from 16 percent in fall ’25.
In beauty, 43 percent of consumers have simplified their routines, but they are becoming more intentional about where they spend in the category. Spending habits in hair care and skin care are proving resilient and are seen as necessities, while fragrance and makeup purchases are skewing more discretionary. Some 27 percent of consumers rank price value and affordability as the most important factor when shopping for new beauty products.
The survey found that brand loyalty in beauty is weakening. While brand reputation and trust ranked second among purchase drivers in spring ’25, it has since dropped to fourth place — behind price, personal fit, and specific products benefits (ie., antiaging, hydration). Consumers are increasingly prioritizing what a product does and what it costs, instead of the name behind it.
One in four beauty consumers identifies as cost-conscious, and their behavior reflects clear trade-offs. Some 35 percent are buying fewer items outright, while 65 percent are switching brands, retailers or both in search of lower prices. The pressure on brands and retailers is growing — not just to compete on price, but on perceived value at the shelf, the survey found.
In apparel, consumers are broadly pulling back on spend, prioritizing value over volume. While lower-income shoppers are tightening their budgets out of necessity, higher-income consumers are reframing their purchases as conscious investments, the survey found. Nearly half of consumers are actively pulling back spend (48 percent), while some are prioritizing value (22 percent) and sticking with trusted brands (14 percent). Only a small group of shoppers are trading up or splurging.
Consumers who plan to spend less in apparel cite income pressure and price changes as top drivers — but motivation differs by age. Younger shoppers pointed to shifting work needs and spending priorities, while older consumers are driven primarily by financial pressures like budget constraints and economic uncertainty.
Another finding in the Alvarez & Marsal Consumer and Retail Group survey was that AI is emerging as a meaningful force in shopping journeys, with 25 to 41 percent of consumers using AI for product discovery, research, and value identification across apparel, beauty and grocery. Millennials and Gen Z in particular are increasingly reliant on this technology, with 64 percent of consumers aged 18 to 44 asking AI for recommendations and 66 percent of those acting on them.
“Consumers are re-orienting the importance of brand in their decision-making, and loyalty is waning,” said Lusk. “That’s not to say branded products cannot win — of course they can. But consumers are focusing less on the logo and more on the attributes that define the product. It’s more important than ever for brands to align their value propositions with what is actually creating purchase intent, and to continually give consumers reasons to buy. Brand reputation alone will not be enough.”
Finally, despite technology’s growing influence in product discovery and research, the store is still the preferred place to buy, the survey showed. Some 44 percent of consumers prefer to make final purchase in-store, compared to just 18 percent who prefer purchasing online. The preference for in-store shopping spans all ages, too. Some 38 percent of consumes less than 45 years old prefer in-store for final purchases, rising to 50 percent for consumers more than 45 years old.
