NIQ says consumers are increasingly choosing either meaningful savings or meaningful upgrades. For retailers and CPG companies, “good enough” isn’t enough to compete anymore.
If there’s one single word that could define the American consumer right now, it’d be “bifurcated.” We’ve spent months talking about bifurcation: lower-income households trading down while more affluent shoppers continue spending. That’s certainly still happening. But NIQ’s latest Consumer Outlook suggests a new challenge is taking shape as we head into 2027.
The split is now showing up in the shopping cart itself, and it looks like this trend will accelerate. Picture something like a barbell; thick, bulky ends and a slender middle.
Consumers are gravitating toward the two ends of the pricing spectrum. Value is gaining, so is premium. And the broad mainstream middle — historically a very comfortable place for established CPG brands — is getting squeezed.
NIQ calls this the rise of the “constraint” and “upgrade” spending mindsets. I call it significant. Reading between the lines there are big implications for assortment.
Globally, 67% of consumers surveyed by NIQ said that if a product isn’t clearly better, they’d rather save their money. At the other end, 56% said that when they do spend more, they would prefer something that is clearly premium.Interestingly, 55% said mid-range products – the proverbial middle – need a clear reason to be chosen over cheaper or premium alternatives.
That’s a tough environment in which to sell something that’s merely “pretty good.”
The “Barbell” Is Already Showing Up in Sales
This isn’t just another consumer sentiment survey telling us what shoppers say they intend to do. NIQ is seeing the same thing in actual CPG sales.
Across 26 measured markets, discount and premium products are gaining value share while mainstream products are losing it. NIQ estimates that more than $23 billion in global CPG value sales share has shifted away from the mainstream price tier as growth increasingly concentrates at the two extremes. And the U.S. is very much part of that story.
NIQ classifies the United States as a “polarized” market. Discount products gained 0.6 percentage points of value share over the latest measured year and premium gained 0.8 points. Mainstream products lost 1.5 points.
That goes a long way toward explaining something we’ve been watching across the industry: Consumers can be intensely price conscious… and still happily buy premium products.
The same shopper might trade down on canned vegetables, paper towels or pantry staples and then spend considerably more on a prepared entrée, specialty cheese, premium coffee or another product where the difference actually matters to them.
There really isn’t a contradiction there.
The shopper isn’t necessarily saying, “I want everything cheap.” More like, “Give me a reason to spend the money.”
‘Good Enough’ Is Becoming a Tough Sell
And that’s where this gets uncomfortable for mainstream CPG brands.
At the opening price point, the proposition is easy to understand: save money. These days, private label goes over particularly well there, alongside value-oriented national brands and aggressive promotional pricing.
Premium has an equally understandable proposition — provided the product really delivers something shoppers value. Better ingredients, say, or greater convenience or better performance. Health benefits or indulgence. Maybe just a noticeably better eating experience.
Then there’s everything in between.
A national brand priced somewhat above a retailer’s private label but offering little obvious differentiation has to answer a pretty basic question now: Why should I pay more for this?
NIQ’s findings suggest shoppers are asking it more frequently. The company found that quality and performance now outrank affordability as determinants of whether a purchase feels worthwhile, 34% to 31%. Its broader conclusion is that consumers are increasingly purchasing by justification rather than habit.
That’s worth thinking about in the context of what’s happening with grocery assortment.
Retailers are under enormous pressure to demonstrate value. They’re strengthening private label, scrutinizing price increases and taking a harder look at assortment productivity. In that environment, shelf space occupied by a product with neither a compelling price advantage nor meaningful differentiation becomes difficult, if not impossible, to defend.
In this environment, a brand can’t just be there because it has always been there.
Value Shoppers Are Getting More Sophisticated
There’s another part of the NIQ report that makes this even more interesting: shoppers are getting remarkably tactical about how they spend.
NIQ found 37% of global consumers are shopping more frequently at discount, value or lower-priced retailers. Another 34% are switching to lower-priced alternatives, while 33% are monitoring the cost of their overall basket.
Meanwhile, 32% are stopping purchases of certain products to concentrate on essentials and another 32% are buying whatever brand is on promotion. 31% are stocking up or buying in bulk when a preferred brand goes on sale, 29% are using stores with loyalty points or using those points to manage spending, and 27% are buying larger sizes.
NIQ describes all of this as “value engineering.”
I think that’s a useful term because it gets us beyond the assumption that value shoppers simply hunt for the lowest shelf price. Consumers are increasingly combining promotions, loyalty points, digital coupons, cashback, member pricing and other savings mechanisms to arrive at the price they actually pay.
And here’s the really important part: sometimes they’re not doing all that work to buy something cheaper.
They’re doing it so they can afford something better.
NIQ argues that savings are increasingly being assembled across the transaction, allowing shoppers to remain highly value-conscious while still purchasing higher-quality or even premium products.
That makes the traditional distinction between a “value shopper” and a “premium shopper” considerably less useful… because they can be the same person.
Grocery May Need to Play Both Ends
That’s why I don’t think the takeaway here is simply “expand private label” or “add more premium products.”
Retailers increasingly have to give shoppers compelling reasons to buy at both ends of the spectrum — while taking a harder look at what’s sitting between them. NIQ’s prescription for polarized markets is essentially the same: strengthen value and premium capabilities simultaneously while rationalizing exposure to mainstream products.
None of this means the mainstream grocery aisle is disappearing. Far from it. Mainstream products still account for 43% of global CPG value share in NIQ’s analysis, compared with 18% for discount and 40% for premium. But mainstream lost 1.0 percentage point of share while discount gained 0.3 points and premium gained 0.6 points.
That’s movement worth paying attention to. So you can see that the shopper trading down and the shopper trading up aren’t necessarily two different people anymore. Often enough, they’re the same shopper making a series of deliberate decisions across the same basket.
Save here. Splurge there. Buy private label where the difference doesn’t matter – pay more where it does. Stack a promotion with loyalty points and suddenly the premium item fits the budget after all.
That’s a much more complicated consumer than simply “value” or “premium,” and it makes the middle an increasingly difficult place to hide.