Retail in 2025 is increasingly defined by what Elizabeth LaFontaine, retail strategist and director of research at Placer.ai, calls a “bifurcation of consumers,” a trend she expects to extend into 2026, according to the firm’s latest report.
“I think what we’re seeing right now is that retail has been more deeply divided than it has been, really since the pandemic,” LaFontaine said.
While consumer sentiment is weakening overall, lower and middle-income shoppers are becoming “more financially constrained and concerned and discerning,” reshaping traffic across food retail, she said.
Visitation is holding up at both ends of the market – from higher-end and fresh-format grocers to value-based formats such as dollar, discount and off-price chains.
“It’s really those retailers in the middle that are becoming even more constrained,” she said.
Where growth is concentrating
At the value end, LaFontaine pointed to store expansion and trade-down behavior, as shoppers seek better value amid ongoing economic pressure. Off-price retailers, she added, are benefiting from high visit frequency as consumers expect “something new, something exciting” alongside clear discounts.
On the higher end of food retail, differentiation is driving performance. “Really fresh format grocery continues to do very well,” LaFontaine said, supported by prepared foods, service and convenience options such as delivery and in-store pickup.
What this means for food and beverage brands
For CPG brands, LaFontaine said the bifurcation of consumers should be the top strategic consideration. CPGs will need to tailor value architecture and assortment strategies by retailer, rather than relying on uniform national playbooks.
“From a CPG perspective, it’s really important to think about how retailers are going to be approaching the changing consumer needs,” she said, citing pack sizes, pricing and promotional strategies as key levers as retailers respond to economic headwinds.
Localization and omnichannel execution rise in importance
Localization is emerging as a competitive advantage.
“Brands that have been able to ingrain themselves into their local communities and have localized offerings really have store formats and assortments that meet the needs of a local community,” LaFontaine said, pointing to strong performance among regional grocery chains.
At the same time, online and in-store shopping are converging. “Consumers now are looking at channels at a brand level,” she said, with shoppers expecting consistent discovery and promotions across physical and digital touchpoints.
As delivery, apps and in-store pickup become standard, discoverability matters more than ever.
“It’s very important…for CPG brands to continue to make sure that they’re showing up online easily for consumers, so that they’re top of mind as a consumer heads in store or decides to convert online,” LaFontaine said.
Agility will be critical in 2026
Looking ahead, LaFontaine said consumer behavior is becoming harder to predict as shoppers make purchasing decisions closer to the moment. “Consumers are more knowledgeable than ever,” she said, reassessing budgets weekly or monthly as conditions shift.
“From a brand perspective, I think it’s just being very flexible and having a lot of agility,” she said. While speed remains a challenge for large CPGs working through retail partners, LaFontaine sees opportunity as consumers pull back on dining out.
“We might see consumers source a lot more of their food in home,” she said – a potential tailwind for grocery, value and warehouse channels.
