Pressure Builds for Consumers as Economic Strain Steadily Increases - KPMG Report
In the face of economic uncertainty and inflation, American consumers are adopting a variety of strategies to stretch their dollars further. These strategies range from prioritizing affordability and value to strategic purchasing and embracing technology-driven shopping tactics.
Prioritizing Affordability and Value
One of the most noticeable changes is the shift towards private-label brands. These brands, which are typically 20-30% cheaper, now account for 25% of sales at major retailers like Walmart and Costco. About 54% of consumers are emphasizing affordability in their purchases[1].
Strategic Front-Loading of Purchases
To avoid future cost hikes caused by tariffs (currently averaging 22.5%) and inflation (around 3%), consumers are strategically front-loading their purchases, especially for high-ticket items like cars and major appliances. This leads to accelerated buying before expected price increases[2][5].
Technology-Driven Shopping Tactics
Consumers are also leveraging technology to optimize their spending and manage cash flow. This includes the use of AI-powered dynamic pricing, omnichannel retail strategies including same-day delivery, and buy-now-pay-later platforms[1].
Focus on Sustainability
Environmental concerns are not being overlooked. Consumers are increasingly focusing on sustainability through returns policies and localized fulfillment that reduce costs and align with the values held by about 50% of consumers[1].
Switching to Lower-Priced Options
Consumers are also making shifts in categories sensitive to inflation, such as toys, homeware, and small electronics, with 75% of consumers opting for value-focused choices[4].
Adapting to Income Disparities
The spending patterns of consumers reflect a nuanced response to economic pressures. While middle-class consumers are cutting back in some areas, affluent consumers may still splurge, creating a complex spending landscape[2].
Consumers Embrace Technology, but with Privacy Concerns
Despite the adoption of technology, consumers remain cautious about their data. According to Sam Ganga, KPMG's AI and Cloud Leader, "Consumers are open to tech - but only if it respects their privacy." Only 34% of consumers are okay with companies using AI to analyze their personal data, while 43% are uncomfortable with this practice[3].
In conclusion, US consumers are demonstrating a combination of cautious yet resilient spending, technological adoption, and value-driven consumer behavior. These strategies are helping them maintain purchasing power despite inflation, tariffs, and economic pressures in 2025[1][2][4].
Additional Findings
- Over 70% of consumers believe a recession is coming within the next year[6].
- Nearly 80% of consumers are either already cutting back or actively looking for deals due to tariffs[7].
- Consumers are moving toward direct-to-consumer (D2C) channels for basics like clothing, food, and personal care, and they expect secure payments, fast shipping, and hassle-free returns from these channels[8].
- Only groceries and automotive expenses are seeing growth in consumer spending[9].
- Nearly one-third (38%) of consumers are drinking less alcohol[10].
- Thrift store apparel spending has increased by 2%[11].
- 58% of consumers still plan summer travel, spending 7% less per trip and focusing on domestic destinations[12].
- Tariffs are causing consumers to expect higher prices for food, clothing, electronics, and cars[13].
- The use of GLP-1 medications for weight loss or health is slowly rising, with 9% currently using them and 6% planning to start[14].
- Fast food visits have increased by 26%, while casual dining visits have decreased by 38%[15].
- 49% of shoppers are chasing discounts and promotions[16].
- In addition to prioritizing affordability, consumers are also embracing technology-driven shopping tactics such as AI-powered dynamic pricing, omnichannel retail strategies, and buy-now-pay-later platforms to optimize their spending and manage cash flow.
- Consumers are increasing their focus on personal-finance matters, with over 70% believing a recession is coming within the next year, nearly 80% either already cutting back or actively seeking deals due to tariffs, and 49% chasing discounts and promotions.
- While lifestyle choices like health-and-wellness and technology continue to be relevant, the current economic uncertainty has caused consumers to shift toward more value-focused choices in categories such as clothing, food, and personal care, with many opting for direct-to-consumer channels.
