Under Pressure, Consumers Shift Their Spending

Geopolitical tensions are taking a toll on consumers’ confidence in the potential for economic growth, and inflation is causing some to shift or cut back spending in certain product categories.

1 / 10

In each of the developing and developed markets that we’ve surveyed, more respondents agree than disagree that geopolitical conflicts or events will slow their country’s growth. The pessimistic outlook is particularly pronounced in developed markets, where a full 50% anticipate a slowdown in growth—more than twice as many as in developing markets. (See “About Our Research” for more information.)

Moreover, as we track consumer confidence in economic growth over time, we see that since June 2025 it has grown increasingly negative in most of the developed countries. Now, a greater percentage of consumers in France, Germany, the UK, and the US feel more likely to see widespread unemployment or depression. Consumers in Japan, Brazil, and China are now more optimistic; more of them anticipate continued good times.

This polarized outlook is just one layer of complexity that companies must contend with. They must also consider how other variables influence consumers’ shopping choices: GenAI use, the need to make tradeoffs, and human factors.

What’s Driving Consumers’ Spending?

Pessimistic or optimistic, consumers across surveyed countries anticipate increasing their spending—most not because they want to, but because they have to. The predicted rise in spending is driven almost entirely by inflation.

Developed markets in particular are feeling the brunt of inflation. Eighty-four percent of consumers there say that inflation accounts for their anticipated increased spending, versus 70% of consumers in developing markets. The uptick in spending applies across most product and service categories.

Most, but not all categories.

Consumers plan to reduce their spending on certain items. Those in all five developed countries we profile plan to cut back spending on alcoholic beverages. Apparel, prepared foods, and packaged snacks are also among the categories designated for cutbacks. Brazil is the only developing nation where consumers predict cutting back on spending, specifically on alcoholic beverages.

What Influences Purchase Decisions?

Consumers’ decisions about what products or services to purchase are influenced by multiple additional variables:

• GenAI use is rising rapidly. Our survey found a 50% increase in consumers using GenAI from February 2025 to November 2025. Shopping-related GenAI use is growing, unlike use at work or for language translation, two use cases that have stabilized, at least for now. In fact, use of GenAI to guide brand and product choices is approaching parity with work-related use. Adoption is even higher in fast-digitizing markets like India, where it has reached 64%.
• Consumers have to make tradeoffs. For example, when it comes to sustainability, consumers’ ultimate purchase choices don’t always align with their stated beliefs. Many say they are concerned about sustainability, but few take action by purchasing sustainable products and services, and fewer still are willing to pay a premium for sustainable options. Take automotive: it’s the category for which the most consumers—71%—cite concerns about sustainability. And it’s the category for which the most consumers are willing to pay a premium—but that’s just 8% of consumers. Notably, though, consumers have neither reduced nor increased their emphasis and willingness to act on sustainability, resulting in a persistent ”say-do gap”; our most recent findings are largely consistent with our survey results from September 2022. We continue to see a significant opportunity to innovate and remove barriers so that consumers who want to make sustainable purchases can more easily do so.
• Human factors influence purchase decisions as well. Overall, 55% of consumers say they have a flexible mindset and are open to trying new brands. Nonetheless, more than 80% ultimately revert to their usual brand or another brand that they have previously tried. Although companies can connect with consumers through more touch points than ever, this inertia suggests considerable room to shape consumer choices and shift purchase patterns.

How Can Marketers Respond?

Consumers are grappling with so much: from macro- and microeconomic forces to technological revolutions, the need to make tradeoffs in areas such as sustainable goods and services, and sometimes-malleable personal preferences.

Against this complex backdrop, it’s all the more critical that companies understand and closely monitor consumers’ needs, feelings, and behaviors to find the best ways to satisfy a consumer base under pressure.

Understand the bigger picture. Assess both the category dynamics and the underlying drivers of spending shifts in each market to shape portfolio strategy and prioritize portfolio segments by risk and growth potential.

Show up in AI ecosystems. As AI becomes an everyday shopping advisor, helping consumers compare, evaluate, and build confidence in their choices, brands must now think beyond SEO and optimize in a world of AEO (answer engine optimization) with structured, trustworthy, comparison-ready content.

Innovate and break tradeoffs. Ensure that sustainable choices are seamless, credible, and cost-neutral to help consumers break tradeoffs and turn intent into action.

Build meaningful engagement. Reimagine marketing and deliver consistent best-in-class experiences to reinforce trust and strengthen long-term affinity. Disrupt entrenched behaviors by optimizing touch points to influence new customers and occasions.

Geopolitical conflicts, galloping inflation, disrupted supply chains, climate change, and rapid technological changes are ushering in an era of unprecedented complexity. The shopping competitive landscape itself is also evolving, adding further complexity for consumers and marketers alike. To navigate this environment, companies must understand how brand choices are being shaped along the purchase journey and find ways to meet consumers where they are: how they want to spend and how they want to shop.

The authors thank Aparna Bharadwaj, Kanika Sanghi, Aditi Swarup, Janmejai Bhargava, Ishita Joshi, and Surbhi Jain, as well as Tomas Andor, Oliver Toman, and Rachna Garg from NativeResearch, for their contributions.