The tradeoff economy: Why stressed shoppers are still spending

New Economic Realities // May 9, 2026 The tradeoff economy: Why stressed shoppers are still spending By Melissa Daniels Subscribe: Apple Podcasts • Spotify For this week’s Modern Retail Podcast, co-hosts Gabriela Barkho and Melissa Daniels were joined by Katie Thomas from the Kearney Consumer Institute to discuss how shoppers’ financial stress is showing up in their shopping habits.

KCI recently released its latest Consumer Stress Index, which monitors 24,000 consumers across 12 countries. It looks not only at consumers’ financial picture but also at their stress related to geopolitics and government, innovation and technology, food and the environment, and health and education.

What’s different this year is that it’s not just one factor causing consumers to feel stressed. It’s the compounding effect of inflation, geopolitical instability and overall uncertainties.

“Put these two analyses together — historic stress levels and a population that feels starved of joy — and you get a consumer landscape that continues to defy the standard recessionary playbook,” the report said.

Tradeoffs in spending While macroeconomic factors like an uncertain labor market and low consumer sentiment may suggest that people would pull back spending, the reality is that people continue to shop. But they’re making more tradeoffs, Thomas said, such as eating out less and buying more apparel.

The current rise in gas prices and associated travel costs may also mean that people pull back on experience-based spending and shift to more durable goods, she said. People are also being more flexible in their choices, such as where they shop for groceries, Thomas said.

Higher-income customers are ditching stigma around places like Walmart, Dollar Tree or Aldi where they can get a better price. “They’ve optimized grocery a lot in favor of figuring out where they’re going to spend and wanting to spend on more highly discretionary categories,” she said.

“It hasn’t felt incredibly traditional in that sense where it’s like, ‘Oh, the most highly discretionary is the most likely to get cut.’ In fact, it’s like, ‘Where is it easiest to cut so I can still have some fun money?’ We still need some joy in our lives.”

The ways shoppers are thinking about price Just because consumers are stressed about their finances doesn’t mean they’re immediately settling for the cheapest option. Rather, as Thomas explains, they take a “price-value equation” into account, considering the quality and meaning of what they’re buying as they decide whether it’s worth the ticket price.

“One of the challenges I see is that brands chase a cheap price, and they strip out quality — like, people are literally only looking at price alone,” Thomas said. “Not only is that not accurate, but it’s also kind of disrespectful to the consumers. People are looking to spend their money in the right way.

They don’t want to buy something that’s bad quality.” What shoppers’ new thinking around price means for brands Some companies, like McDonald’s with its new McValue Menu, may try to adjust pricing to appeal to customers who are thinking about their spending, Thomas said.

Beyond ticket price, Thomas said brands are thinking about how to be cautious with their own operational costs. Some brands may be trimming SKUs to focus on their hero products, she said. Others are shifting marketing dollars from retention to acquisition to have a shot at standing out in a crowded market.

The challenge, Thomas said, is how to grow and attract new customers without losing the loyal shoppers. Some people who decide to trade down from a more premium product to a private label, for example, won’t be easy to get back.

“That’s always the battle to hear, though — acquisition versus retention — and usually your most powerful consumers are your existing consumers,” she said.