Beauty in the Tradeoff Economy

Financial pressure continues to weigh on consumers and is fundamentally reshaping the way they shop, spend and make decisions across categories, according to the Spring 2026 Consumer Sentiment Survey from Alvarez & Marsal’s Consumer and Retail Group (A&M CRG).

“Today’s consumers aren’t simply tightening their belts—they’re making thoughtful tradeoffs,” said Chad Lusk, managing director at A&M CRG. “They’re cutting back on volume and dramatically changing shopping routines to stretch their wallets. At the same time, consumers are  choicefully investing in products that deliver recognizable differentiation and value at higher price points. Whether it’s a premium grocery item with better ingredients, an apparel piece built to last, or a beauty product that actually performs, consumers are buying less but expecting more.”

According to A&M CRG, consumers are seeking alternative ways to navigate financial pressure beyond simply spending less. Across categories, consumers are making deliberate behavioral shifts to stretch their wallets and the cumulative effect is a fundamental change in how they shop.

Even as earning expectations hold relatively stable, consumers continue to plan to pull back on spending, revealing a disconnect between confidence in their income and willingness to spend, and how far behind many consumers still feel, according to the experts at A&M CRG.

Grocery remains the only category where shoppers expect to spend more, prompting them to actively seek ways to manage spending.

The Impact on Beauty

In beauty, 43% of consumers have simplified their routines, but they are becoming more intentional about where they spend in the category, according to A&M CRG. Spending habits in haircare and skincare are proving resilient and are seen as necessities, while fragrance and makeup purchases are skewing more discretionary, according to the report.

According to A&M CRG, across beauty categories, 25-30% of female consumers report spending less, consistent with trends of buying fewer items and training down. A&M CRG’s data shows that haircare and skincare remain more resilient. Fragrance and makeup are showing more discretionary in A&M CRG’s findings, with 25% and 28% of consumers making no purchases over the last six months, respectively.

But even as consumers broadly pull back, a meaningful share are selectively trading up when the value feels justified, finds A&M CRG That is occurring in nearly equal parts quality and longevity, with enjoyment and feeling special. This points to a more nuanced mentality where consumers are cutting back in some areas while investing in products that deliver on what matters most, based on A&M CRG analysis.

For example, in beauty 20% of consumers are trading up despite broader efforts to manage spend. Higher-quality ingredients (51%), performance (43%) and brand trust/quality (40%) are the top reasons to trade up—and the first two resonate across all income levels, according to A&M CRG.

The third priority, according to the study, reveals a divide at the income level: lower-income shoppers prefer products suited to their skin type and concerns (40%) while higher-income consumers lean on brand trust (43%), reflecting a subtle but meaningful difference between functional benefits and brand reputation.