A new report from from NielsenIQ and World Data Lab concludes the U.S. marketplace is diving more clearly into the two distinct consumer behaviors: one based on a willingness to pay more for products believed to have particular worth and the other based on an active pursuit of of lower-cost alternatives.
IN the report — “A Tale of Two Consumers: The Polarized Mindsets Reshaping Global Consumption” — the trend indicates growth is concentrated at the premium and value ends of the market, creating what NIQ and World Data Lab describe as a barbell market as consumers gravitate toward products that deliver exceptional value or justify a higher price point. The implication is that the middle ground, which has been a tough place to play for retailers and vendors alike, will become even rougher territory.
Based on NIQ’s longstanding collaboration with World Data Lab, the latest report focuses on the U.S. in particular. Key findings include:
- Premiumization is especially strong in wellness, beauty and identity-driven categories, where consumers continue to pay more for perceived quality and benefits.
- Younger generations are driving premium growth categories, such as beauty, in which they have personal investment, with Gen Z spending power projected to reach $12 trillion globally by 2030.
- Private labels are increasingly competing at the value and premium ends of the market, squeezing traditional brands.
NIQ also pointed out that the more than $1.1 trillion fast-moving consumer goods market is polarizing at a more urgent pace, with growth concentrated in premium and value tiers as mainstream products lose share. The report indicated American shoppers are routinely trading up and down within the same shopping basket. A consumer might, for example, choose premium skincare products, specialty beverages or wellness-focused items while simultaneously purchasing value-oriented household staples or private label products elsewhere in the store.
NIQ emphasized that, although income and age continue to influence purchasing decisions, demographic factors are becoming less predictive than is a consumer’s mindset when approaching a particular category or shopping occasion.
“The U.S. consumer hasn’t stopped spending, but rather, they have become much more intentional about where they spend,” said Ramon Melgarejo, NIQ president of consumer intelligence initiatives and e-commerce. “Consumers are increasingly asking whether a product truly earns a premium or whether a lower-priced alternative will do the job just as well. Products that fall in the middle are finding it harder to answer that question.”
