There is a competitor retailers rarely put on the competitive map. It isn’t Walmart, Amazon, Temu, or the retailer across the street. It isn’t even another brand. It is nothing. Don’t buy another sweater. Keep the television another year. Skip the furniture upgrade. Buy the private label instead. Cancel the subscription. Put the money toward a vacation, a concert or dinner with friends.
Have consumers really changed spending? And the answer is: Consumers are asking retailers permission to sell to them, which isn’t making them spend less, just spend more deliberately.
Who’s Your Competition?
For most of retail history, merchants competed primarily for share of wallet among each other. Today, they increasingly compete for something that comes outside the wallet: the customer’s permission to be purchased.
That distinction matters because the consumer has not stopped spending. Recent U.S. retail sales demonstrate exactly the opposite. What has changed is how selectively that spending is being allocated. The consumer who trades down in one category can trade up in the next. She can postpone a major purchase while spending freely on travel. She can buy the private brand detergent and the premium moisturizer in the same trip. The modern basket is becoming less a collection of things consumers can afford to buy and more a deliberate choice of the things they have decided are worth their money.
The Yes Is Getting Harder to Earn
Target has been living this tension of need vs. want in real time. In its 2025 annual report, the company described consumers as cautious, value-focused, and selective in discretionary spending. Its response was not simply to become cheaper. Target says its strategy is to build “curated” assortments combining quality, newness, design and value, particularly in categories where it can give customers something distinctive.
Best Buy sees essentially the same customer in a different category. CFO Matt Bilunas described consumers entering fiscal 2026 as resilient but “value focused and thoughtful about big ticket purchases.” Then he added the part that matters: “Those same consumers remain willing to spend on expensive products when they needed them or when genuine technological innovation gave them a reason to.“
That isn’t a consumer who has stopped consuming. It is a consumer asking, “Why this? Why now?” The nuance gets lost when every shift in spending is explained by market experts as a value story. Value matters enormously, but value and low price are not synonyms. Increasingly, value appears to be the consumer’s judgment about whether something deserves the investment it requires, including time, attention, and the space it takes up in her life.
Take a Look Across the Atlantic
Marks & Spencer provides an unusually good example of what happens when a retailer understands the difference between value and judgment. Its own consumer research found that 95 percent of its 43,000-member M&S Food customer community considers getting good value from the products they choose more important than simply choosing the cheapest product. M&S responded by investing simultaneously in price and quality, locking prices on shopping-list staples while upgrading more than 1,000 food lines.
Then something interesting happened. Customers didn’t simply reward M&S for being cheaper. Larger basket shops increased 13 percent. In fashion, home, and beauty, sales from the higher-quality Autograph range increased 47 percent as customers invested in what M&S described as higher-quality, versatile products at the top end of its assortment. The same consumer with two apparently contradictory behaviors. That pattern challenges the conventional segmentation of consumers into value and premium shoppers. Increasingly, the same person can be both.
IKEA gives us an important counterexample because any argument that consumers are simply buying less falls apart pretty quickly. Facing what IKEA described as thinner consumer wallets, the company substantially lowered prices across its markets in fiscal 2024. In the U.S. alone, it reduced prices on nearly 1,500 products. The result was not consumers pocketing all the savings. IKEA U.S. reported a 2.7 percent increase in pieces purchased per basket. Globally, lower prices helped drive increased visitation and unit volumes. The pattern continued, and IKEA’s global retail sales slipped slightly in fiscal 2025, largely reflecting those lower prices, while actual sales volumes increased 2.6 percent.
Consumers clearly haven’t developed an ideological objection to buying stuff; give them sufficient value and they will still buy it. That is why I am skeptical of the increasingly popular narrative that consumers are embracing minimalism and simply want less. There is some evidence behind the broader movement. Recent consumer research has found greater interest in curated consumption, decluttering and reducing unnecessary acquisition. But the marketplace tells a more complicated story. We may not be witnessing the decline of consumption nearly as much as a reallocation of it.
The Basket Has Become a Portfolio
Consider what has happened in grocery. Private label gained additional share across Europe in 2024, reaching 39.1 percent of grocery sales value. More interestingly, McKinsey found that 84 percent of surveyed European consumers who buy private label expected to continue doing so even if their purchasing power improved.
Spain amplifies the behavior. ALDI’s 2025 research found private-label products representing more than half of products purchased by Spanish households in its study, while 83 percent of respondents reported being satisfied with private-label quality. Once consumers discover that the less expensive alternative satisfies the need, the premium has to re-earn its place in the basket.
The same logic can work in reverse. M&S customers trading up into Autograph aren’t ignoring value. They have concluded that additional quality and versatility justify paying more. The consumer therefore isn’t moving uniformly toward cheap or expensive, material or experiential, national brand or private brand. The basket increasingly resembles an investment portfolio.
Retail Has Spent Decades Adding
This is where the consumer’s changing behavior runs headfirst into the operating logic of retail. We have spent decades adding. More SKUs. More brands. More line extensions. More promotions. More channels. More loyalty offers. More digital messages. More marketplace sellers. More personalization. Most of those additions made sense individually. Together, they created extraordinary over-abundance.
Consumer research provides some support for the response we are now seeing. Recent studies of household decluttering distinguish a home that is merely untidy from one containing too many things. Research on time poverty has found greater attraction to minimalist consumption among consumers seeking to restore a sense of order. Research into ‘de-influencing’ finds credibility increasingly attached to people telling consumers what they don’t need to buy.
The consumer who eliminates ten pieces from a wardrobe might add another streaming subscription. The family postponing furniture replacement might take a more expensive vacation. Someone who carefully curates a home can simultaneously maintain dozens of apps, thousands of photos, multiple loyalty memberships, a crowded social network and a calendar that requires its own logistics manager. We may not be eliminating complexity. We may be reallocating it. And that changes the retail opportunity.
Curation Is Not About Offering Less
Trader Joe’s has understood this intuitively for years. Its stores don’t attempt to reproduce the endless supermarket aisle. The proposition is that someone has already done some of the choosing. But curation should not be confused with SKU reduction.
Walmart demonstrates why. Its customers continue responding to a broad assortment coupled with value and convenience; fiscal 2025 ended with higher transaction counts and unit volumes. IKEA reduced prices and sold more pieces. M&S invested in innovation and launched more than 1,400 new food lines while simultaneously becoming more disciplined around value.
Consumers increasingly need help determining what matters. That may ultimately be one of the most consequential applications of AI in commerce. If the digital shelf is effectively infinite, the customer’s problem is no longer access; it is judgment. The winning shopping agent will not be the one capable of finding 10,000 possibilities. It will be the one trusted to reduce those possibilities to three that deserve consideration. At their best, retailers have always been in the editing business. We may simply have forgotten it during an era when adding assortment was easier than making difficult choices about it.
Competing Against Nothing and Everything
The most important competitive question may no longer be, “How do I get the consumer to buy mine instead of theirs?” Increasingly, the first question is whether the consumer buys the category at all. Competing against nothing and everything makes the job of the merchant simultaneously harder and more important.
Price still matters. Convenience matters. Assortment matters. Innovation matters. But none of them independently guarantees inclusion. The consumer appears to be making more deliberate decisions about where to economize, where to indulge, what to postpone and what no longer deserves a place at all. Retailers should accept the fact that the consumer is editing, and everything in the basket needs to earn their permission to stay.
