US Shoppers Ask if a Lower-Priced Product Will Do Job as Well as Premium

US marketplace is increasingly defined by two distinct consumer behaviors: shoppers willing to pay more for products they believe are worth it, and shoppers actively seeking lower-cost alternatives. As a result, growth is concentrating 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 findings build on NIQ’s recent global research into consumer polarization, private label adoption, and AI-driven commerce, as well as its multiyear collaboration with World Data Lab to uncover generational spending trends worldwide. In the US in particular, the impact of consumer purchasing polarization is becoming especially visible on store shelves.

Key US findings from A Tale of Two Consumers report include:

• The more than $1.1 trillion FMCG market is increasingly polarizing, with growth concentrated in premium and value tiers while mainstream products lose share.
• Premiumization is strongest in wellness, beauty, and identity-driven categories, where consumers continue to pay more for perceived quality and benefits.
• Younger generations are driving premium growth across categories including Beauty, Soft Drinks, and Salty Snacks, with Gen Z spending power projected to reach $12 trillion globally by 2030.
• Private labels are increasingly competing at both the value and premium ends of the market, putting pressure on traditional brands from both directions.

“The US consumer hasn’t stopped spending, but rather, they have become much more intentional about where they spend,” said Ramon Melgarejo, President of Consumer Intelligence Initiatives & E-commerce at NIQ. “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.”

The report finds that American shoppers are routinely trading up and trading down within the same basket. A consumer may 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.

This behavior reflects a broader shift away from traditional demographic assumptions. While income and age continue to influence purchasing decisions, they are becoming less predictive than a consumer’s mindset in a particular category or shopping occasion.

The New Pressure on Mainstream Brands

The rise of premiumization in categories tied to self-care, wellness, and personal identity is creating new opportunities for brands that can clearly communicate meaningful benefits. At the same time, stronger private label offerings are giving consumers credible alternatives across a growing number of categories.

For manufacturers and retailers, the implications are significant. Brands that lack a distinct premium proposition or a compelling value advantage increasingly risk being squeezed between premium competitors and rapidly evolving private label offerings.

“Younger consumers are proving especially influential in shaping premium growth,” said Liz Buchanan, President of North America, NIQ. “However, the broader story is one of increasingly selective consumer behavior, as shoppers of all ages become more deliberate and more willing to switch when products no longer justify their place in the basket.”

As consumer polarization continues to reshape the US FMCG landscape, the report suggests that future growth will depend less on targeting the average shopper and more on understanding when consumers choose to trade up, when they choose to save, and why.

To learn more and view the full report, please visit niq.com/tale-of-two-consumers.