How Consumer Caution Is Reshaping Brand Growth

How Consumer Caution Is Reshaping Brand Growth, from Costco’s trusted Kirkland brand to Target’s thirteen quarter sales slide.

Contents

Key Takeaways

Consumer caution is psychological, not just financial: confidence fell even as average wages climbed in 2025.
Kirkland Signature hit $90 billion in sales by pairing savings with quality, not by discounting alone.
Target’s 13-quarter sales slump shows trust deficits hurt brands even when prices stay competitive.
Insurgent brands like Olipop and Vuori captured outsized growth by proving value rather than chasing lowest price.

Target has now posted thirteen straight quarters of flat or falling sales. Not one bad quarter. Not two. Thirteen in a row, stretching back through 2023 and into early 2026, in an economy where the same shoppers walking past Target’s shelves are spending more than ever somewhere else entirely.

That somewhere else is Costco. In roughly the same stretch that Target’s sales stalled, Costco’s Kirkland Signature private label grew into a business worth about $90 billion a year, on its own, tucked inside a warehouse chain most people still picture as a bulk toilet paper stop. Same inflation. Same cautious, price checking, budget tracking consumer. Wildly different outcomes. That gap is the whole story of brand growth right now. Caution hasn’t made people stop spending. It’s made them pickier about who earns it.

What “Consumer Caution” Actually Means in 2026

Call it caution, call it hesitation, call it the vibecession that refused to end. Whatever you call it, the mood behind this year’s consumer behavior trends is measurable, and it isn’t subtle. Four numbers carry most of the story:

86% of U.S. adults say most things are simply too expensive right now, and 69% say they often feel like they’re living paycheck to paycheck (MRI Simmons, August 2026).
151 million U.S. adults say they haven’t adjusted to inflation, and 57% of that group says it’s still actively hurting them (MRI Simmons, August 2026).
37% of U.S. consumers named rising prices their top financial concern by late 2025, a sharp jump from midyear (Numerator Visions, 2026).
Consumer confidence fell 8.2 points year over year as of August 2025, even as average U.S. wages climbed to $36.53 an hour (NIQ, “From Inflation to Intention,” 2026).

That last one deserves a beat. Wages went up. Confidence went down anyway. Caution, it turns out, isn’t a pure math problem people are solving against their bank balance. It’s psychological, and this year it’s proving stickier than the underlying numbers would predict. Brands treating it as a temporary blip that clears up once prices stabilize are misreading the consumer shopping trends shaping 2026. It’s driving decisions at the register today, and it isn’t fading on its own.

How Inflation Is Affecting Consumer Shopping Behavior in 2025–2026

Here’s the part that gets lost when people talk about how inflation is affecting consumer shopping behavior in 2025 and 2026: it isn’t one story. It’s two, running side by side, and they look almost nothing alike.

The K shaped divide

Numerator’s Visions 2026 report found that higher income households have grown their inflation adjusted spending on discretionary categories like travel, entertainment, and services by 6% compared with 2019. Lower income households are moving the opposite direction. Their base spending has actually declined in recent months, and financial stress inside that group keeps intensifying. Same country, same headlines about inflation cooling, two completely different lived experiences of what caution means at checkout. The “average American shopper” that trend reports love to describe doesn’t really exist right now. There are at least two of them, and they’re behaving nothing alike, which matters enormously for any brand trying to price and position itself for one imagined middle.

What’s getting cut vs. what’s protected

Groceries, health products, and household essentials are mostly holding steady. Nobody’s skipping the toothpaste aisle to save money. What’s absorbing the cuts is everything discretionary: electronics, apparel, dining out. Those are the categories that flex first when a household tightens its budget, because they’re the ones a family can postpone without anyone going without.

The shopping pattern backs this up. Placer.ai data cited by Supermarket News in February 2026 shows shoppers making more frequent trips to stores but buying fewer items on each visit, smaller baskets, more price comparison, more hopping between retailers to chase the better deal on any given week. People haven’t stopped shopping. They’ve stopped shopping the way they used to, loyal to one store, in one big weekly trip. That shift alone should worry any brand that built its growth plan around habitual, single retailer loyalty.

What Google’s Shopping and Market Data Actually Shows

If you’ve searched for “Google consumer insights” or “Google shopper insights” expecting to land on some official dashboard, you’ve probably already hit the problem: neither one is an actual product name. Google doesn’t sell a tool called either of those things. What exists instead is Think with Google‘s “Consumer Insights” hub, a library of articles and trend reports, not a live data feed anyone can query.

The real data tool sits somewhere else. Google Merchant Center’s Market Insights reporting, specifically its Best Sellers report and Price Competitiveness report, shows retailers what’s actually moving and how their own pricing stacks up against competitors, built on live shopping demand rather than survey responses. As of this month, that reporting runs through the newer Merchant API. The system it replaced, the Content API for Shopping, was retired on August 18, 2026, so any brand still pointed at the old API has already stopped getting fresh product data without necessarily realizing it. There’s a thread connecting all this back to caution, too. AI-driven product discovery keeps expanding, but as NIQ put it in its 2026 research, “Americans value efficiency but remain cautious about AI-enabled shopping experiences, particularly around transparency and privacy.” Even the tools people use to shop are getting the same skeptical treatment brands are.

Winners and Losers: Two Brands, Same Economy

Costco and Kirkland Signature: trust priced in

Kirkland Signature, Costco’s private label, generated roughly $90 billion in sales in fiscal year 2025, the year that closed on August 31, 2025. Sit with that number for a second. That isn’t Costco’s total revenue. That’s one house brand, inside one retailer, doing sales that put it in the range of most standalone public companies.

Costco’s own leadership is fairly direct about why. On the company’s Q3 fiscal 2026 earnings call in May, CFO Gary Millerchip said new Kirkland Signature items are built to deliver “savings of at least 15 to 20% to the national brand equivalent with equal or better quality.” Notice the order of that sentence. Costco isn’t pitching Kirkland as the cheap option, it’s pitching it as the smart one, quality held constant, savings stacked on top of it. That’s a different message than a straight discount play, and it’s a big reason the brand keeps growing through a stretch when so many competitors are stalling out. Value and trust are doing the work together here. Price alone isn’t carrying it.

Target: when value alone isn’t enough

Target’s numbers tell nearly the opposite story. Comparable sales fell 2.6% across all of fiscal 2025, the retailer’s 13th consecutive quarter of flat or declining sales, according to its Q4 and full year earnings release in March 2026. In store sales alone dropped 3.9% in the fourth quarter, even as digital sales edged up 1.9%, which means Target’s core physical store trip is losing ground even to its own website.

Target’s leadership isn’t pretending otherwise. Chief Commercial Officer Rick Gomez told reporters in November 2025 that shoppers are “choiceful, stretching budgets and prioritizing value.” True enough, but it doesn’t fully explain the gap with Costco. Target has also spent the past two years working through real trust and reputation problems, tied to public backlash over policy reversals and tariff pressure on its supply chain, layered on top of the same caution every retailer is navigating. Value alone hasn’t offset that. The shoppers walking past a Target aisle and straight into a Costco checkout line aren’t necessarily chasing the lower price. They’re choosing who they trust to actually deliver on it.

Put the two side by side and the pattern is hard to miss:

Costco grew a $90 billion house brand by pairing savings with quality, not by discounting; Target cut prices in places and still lost ground for 13 straight quarters.
Both brands are operating in the exact same inflationary environment. The gap between them isn’t about the economy. It’s about which brand shoppers trust to deliver real value.
For any brand watching its own numbers slip, the lesson here isn’t “lower your prices.” It’s “prove your value,” which is a much harder, much slower thing to actually do.

Gen Z’s Version of Caution Looks Different

Gen Z’s relationship with caution doesn’t look like older generations’ version of it. It looks more like caution with an asterisk attached.

Gen Z cut overall spending 13% between January and April 2025, concentrated in apparel, accessories, and electronics (PwC analysis of transaction data, 2025).
Gen Z planned to cut 2025 holiday spending by 23%, after increasing it 37% the year before, and still planned to spend an average of $1,357 over the season (PwC 2025 Holiday Outlook Survey).
In a five year PwC review, more than 79% of Gen Z shoppers wait for products to go on sale, and only 21% regularly pay full price (PwC, reported by The Robin Report, January 2026).
Gen Z’s global spending power is still projected to reach $12 trillion by 2030 (NIQ/GfK/World Data Lab, August 2026).

Read those together and a pattern emerges that’s different from what “Gen Z is pulling back” headlines usually suggest. This isn’t a generation opting out of spending. It’s a generation that’s gotten very good at waiting, comparing, and only pulling the trigger once the value case is proven, not just promised. That $1,357 average holiday spend, tucked inside a planned 23% cut, points to shoppers with real spending power making calculated choices, not shoppers who’ve simply run out of money. That’s a hard shift for brands built around impulse purchases and habitual repeat buying. It rewards the ones willing to earn the sale slowly, over a longer runway, instead of chasing a fast conversion.

The Insurgent Brand Playbook: How Smaller Brands Are Growing Anyway

Olipop is maybe the cleanest example of what winning inside consumer caution actually looks like for a small brand. The prebiotic soda company was valued at roughly $200 million in 2022. By February 2025, a $50 million funding round led by J.P. Morgan Private Capital’s Growth Equity Partners valued it at $1.85 billion, close to a 9x jump in under three years. Vuori, the activewear brand competing directly with Lululemon, followed a similar arc. An $825 million investment led by General Atlantic in November 2024 valued the company at $5.5 billion, and Vuori has been confirmed profitable on both an EBITDA and net income basis since 2017.

Neither brand won by being the cheapest thing on the shelf. Zoom out to the category level and the same pattern shows up at scale. Bain & Company’s 2026 US Insurgent Brands report, its 10th annual edition, built on NielsenIQ data, found that 113 insurgent brands captured nearly 36% of all category growth NielsenIQ tracked across FMCG in 2025, while holding less than 2% of total market share between them. Since 2017, close to 400 of these smaller, challenger brands have generated roughly $60 billion in incremental U.S. retail sales, growth the big legacy players didn’t capture. Changing consumer behavior isn’t just rewarding the biggest names with the biggest ad budgets anymore. It’s rewarding whichever brand, big or small, makes its value case obvious and specific instead of generic.

What This Means for Brand Growth in 2026

Pull every number in this article back together, from Kirkland’s $90 billion brand, to Target’s thirteen quarter slide, to Gen Z’s patient, deal hunting habits, and a fairly consistent playbook emerges, even across categories as different as warehouse retail, activewear, and soda:

Price alone doesn’t win. Kirkland grew on trust plus value together, not on discounting.
Trust deficits get punished fast, even when a brand is affordable. Target’s 13-quarter slump proves that.
Private label and challenger brands are the biggest beneficiaries of consumer caution right now, not necessarily the biggest incumbents.
Gen Z hasn’t left the market. They’re slower to convert and want value proven, not just claimed in an ad.
AI-driven discovery, through tools like Google’s Merchant Center data and gen-AI search, keeps growing, but shoppers still want reassurance that a real person, not just an algorithm, stands behind the brand.

None of these ideas are complicated on their own. What’s changed is how little patience shoppers have for brands that skip straight to a discount instead of doing the harder work first, building the kind of trust that survives a bad quarter, not just a good one.

Frequently Asked Questions

Is consumer spending actually declining in 2025–2026?

Not overall, no. Spending is shifting, not shrinking. Higher income households have actually increased inflation adjusted spending on discretionary categories by 6% versus 2019, while lower income households are pulling back (Numerator Visions, 2026). The caution shows up in where money goes, not whether it gets spent at all.

What generation is cutting back the most?

Gen Z has made the sharpest visible cuts, trimming spending 13% between January and April 2025, concentrated in apparel, accessories, and electronics (PwC, 2025). But Gen Z’s global spending power is still projected to hit $12 trillion by 2030, so this looks like delayed spending, not lost spending.

Are private label and challenger brands really growing faster than national brands?

In plenty of categories, yes. Kirkland Signature reached roughly $90 billion in sales in fiscal 2025. Separately, Bain & Company’s 2026 Insurgent Brands report found 113 challenger brands captured nearly 36% of all tracked FMCG category growth in 2025 while holding under 2% of total market share.

What does “Google Shopper Insights” actually refer to, since it’s not an official Google product name?

It’s not a real product name, just common search phrasing. What people are usually looking for is either Think with Google’s Consumer Insights hub, which is trend articles, not live data, or Google Merchant Center’s Market Insights reporting, delivered through the Merchant API, which shows real best seller and pricing data.

How Consumer Caution Is Reshaping Brand Growth

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Key Takeaways

What “Consumer Caution” Actually Means in 2026