Episode Overview

Title: Consumer Spending Reality Check & Why Trade-Down Behavior Is Here to Stay with A&M's Chad Lusk | 5IM
Date: November 18, 2025
Host: Omni Talk Retail
Guest: Chad Lusk, Partner & Managing Director at A&M Consumer and Retail Group

This episode centers on the findings of A&M CRG's latest biannual consumer sentiment survey, with Chad Lusk breaking down what’s really happening with U.S. consumer spending. The main themes include changing consumer priorities amid sustained economic pressures, the rise of private label/store brands, and expected trends for the 2025 holiday season. The conversation delivers actionable insights for retailers and CPGs grappling with inflation, evolving consumer loyalties, and “trade-down” behaviors.

Key Discussion Points & Insights

1. Consumer Spending Intentions: Optimism or Illusion?

(00:51 - 02:21)

• Apparent Optimism: Survey shows a significant jump—an 800 basis points increase—in consumers’ intent to spend more this fall, the largest bump since spring 2023.
• Caution Advised: Chad Lusk urges listeners not to equate this uptick with true optimism.

  "Let's be careful about using that word optimism, okay? It's cautious at best." (00:51, Chad Lusk)

• Who’s Driving the Numbers?
  • Higher household income earners are most responsible for the positive shift.
  • Households earning under $100,000 still show a -9 net intent to spend more.
  • The intent to spend is concentrated on basic needs, especially food and beverage—the only category with a net intent to spend more among all consumers.
• Price vs. Volume:

  "Just because consumers expect to spend more doesn't mean they're gonna buy more." (01:48, Chad Lusk)
  Spending is up largely due to increased prices, not greater quantities consumed.

2. Impact of Inflation & Tariffs

(02:21 - 02:52)

• 60% of consumers believe tariffs have contributed to double-digit food price increases.
• 20% report seeing 30%+ price hikes.
• 40% have reduced grocery purchases in direct response to higher costs.
• Increased spend expectation is driven by price hikes, not increased consumption.

3. Stretching the Wallet: “Trade-Down” Behavior Intensifies

(03:00 - 04:11)

• Three Key Ways Consumers Save:
  • Switching to cheaper brands.
  • Shopping at lower-priced stores.
  • Simply buying less.
• 40%+ of those reducing spend in beauty/personal care plan to choose cheaper brands; for grocery shoppers, this is over 50%.
• Private label adoption soars:
  • 80%+ of higher income respondents buy private label somewhat or very often.
• Store Switching: 58% increased trips to lower-priced stores "somewhat or more often" this cycle—rising especially among higher earners.
• This “trade-down” behavior may become permanent as lower-priced retailers outperform traditional ones.

4. Lessons for Retailers & CPGs: The New Power of Private Label

(04:19 - 05:38)

• Private Label is No Longer Just Generic:

  "Private labels are brands, right. They no longer stand for generic, they stand for strength." (04:22, Chad Lusk)

• Consumer Perceptions:
  • 68% say store brands are “as good or better” in quality as national brands
  • 60% cite unique and preferable flavors/offerings in store brands
  • 66% say store brands meet dietary/lifestyle needs
• Implication:
  • Winning brands deliver strong value or clear, tangible benefits worth paying extra for.
  • The “large middle tier” (neither opening price point nor truly premium/unique) is under pressure.

5. Holiday Season Outlook: What’s Next?

(05:48 - 07:10)

• Holiday Spend Predictions: Consumers report plans to keep holiday spending roughly flat versus last year.
  • Matches NRF forecasts and year-to-date retail sales trends (~4% up nominally; flat to 1% real growth with inflation at 3%).
• Holiday as “Essential Spend”:

  "Holiday in a lot of ways falls into these kind of routinely budgeted essentials category at this point." (06:10, Chad Lusk)

  • Gifts for family remain prioritized.
  • Some cutbacks in “extras” like decorations, entertainment.
• Impulse Purchases: The holidays invite unplanned spend:

  "It's like candy at the checkout aisle. You didn't plan to buy that candy bar, but you're there, it looks good and it's going to make someone happy, in that case, yourself." (06:24, Chad Lusk)

• Self-Gifting: Data shows consumers plan to buy slightly more gifts for themselves—a form of small indulgence.
• Advice for Retailers: Closely watch sales indicators, manage inventory and use markdowns proactively.

Notable Quotes & Timestamps

• Cautious optimism:
  "Let's be careful about using that word optimism, okay? It's cautious at best."
  — Chad Lusk (00:51)
• Inflation versus consumption:
  "Just because consumers expect to spend more doesn't mean they're gonna buy more."
  — Chad Lusk (01:48)
• Private label strength:
  "Private labels are brands, right. They no longer stand for generic, they stand for strength."
  — Chad Lusk (04:22)
• Quality perceptions:
  "68% said store brands offer quality that is as good or better."
  — Chad Lusk (04:45)
• Holiday impulse behavior:
  "It's like candy at the checkout aisle. You didn't plan to buy that candy bar, but you're there, it looks good and it's going to make someone happy, in that case, yourself."
  — Chad Lusk (06:24)
• Essential nature of holiday spending:
  "Holiday in a lot of ways falls into these kind of routinely budgeted essentials category at this point."
  — Chad Lusk (06:10)

Timestamps for Key Segments

• Consumer spending intentions & the income divide – 00:51
• Inflation’s impact and consumer perception of tariffs – 02:21
• Trade-down strategies: Brands, stores, buying less – 03:00
• Private label’s new strength and consumer perceptions – 04:19
• Holiday season spending expectations and behaviors – 05:48

Summary Flow & Takeaways

• Consumer spending is up only on the surface—largely reflecting higher prices.
• Food and beverage are the only broadly “safe” categories; discretionary spend is being reined in.
• Even higher-income groups are now regularly adopting cost-saving, trade-down behaviors (more private label, cheaper stores).
• Private labels have broken through on quality and innovation—posing a challenge to legacy national brands.
• The 2025 holiday season will likely be steady, with little real growth—consumers focusing on essential gifting and showing some self-indulgence in spending.
• Retailers should be nimble, focusing on value, optimizing inventory, and recognizing the permanent shifts in consumer mindset and behavior.

This episode provides a reality check for everyone in retail: the “new normal” is a value-led landscape with empowered, pragmatic shoppers—and trade-down is anything but a temporary trend.