The Great Tradedown

When a brand executive has nightmares, they typically feature consumers walking right past their carefully designed product displays, only to pause at the generic option and enthusiastically begin filling their carts. Oh, the horror!

Turns out, this bad dream is coming true. Sixty-one percent of consumers say they are already trading down to cheaper products, according to a new survey by marketing research firm Savanta, and 77% say that they expect their finances to be further disrupted by tariffs. Brands find these statistics horrifying. “Once shoppers trade down, as long as they find the experience acceptable, they’re going to stay with it,” says retail expert Craig Rowley, senior client partner at Korn Ferry. Long-term customers—gone in an instant.

To be sure, some customers might return to their favorite shoes or pasta brands… in 2027. In the meantime, trading down is happening on a large scale across consumer goods. And it may grow, with this week’s US inflation numbers edging up. Consumer changes of routine are particularly troubling to branding experts, because shopping itself is fundamentally a practice of habit: Consumers tend to frequent the same stores and online shops, and within them, usually buy the same items over and over.

But experts say that brands have a bigger problem than shrinking customer budgets on their hands. Customers are increasingly skeptical about pricing, especially after watching some companies raise prices before tariffs have impacted them. “There’s a lot of cynicism around marquee brands,” says David Vied, global sector leader for medical devices and diagnostics at Korn Ferry. 

Similar consumption dynamics are playing out in B2B, where longtime customers are renegotiating pricing this quarter and asking for segmentation of contracts. “We’re seeing it all over,” says Ron Seifert, North America workforce reward and benefits leader at Korn Ferry. “Whether it’s IP or experience or speed or depth of insights, firms have to differentiate.”

In consumer, the real victor is retailers with private labels, which surged in the wake of the Great Recession, the last time consumers traded down in large numbers. Private labels are popular among retailers because they provide a lower price choice within the same store, and because they provide exclusivity, which attracts consumers. And, of course, they are more lucrative per unit for the retailer. “They’re a real win for retailers,” says Rowley.

Brands, of course, are many months into working through their options. “Right now it’s all about choices,” says Renee Whalen, North America consumer market leader at Korn Ferry. Customers have hard choices, and brands have harder choices. Among brands’ options: offering versions that cost less to both manufacturer and customer, such as smaller packages or a line of lower-quality shirts. And if all else fails, brands are increasingly jumping into the private-label game, often by relabeling their product as a popular store’s house brand. “Many companies are leaning into that bet,” says Whalen.

Another option is to offer promotions, which brands agree on with retailers and typically fund. “Their challenge is to sharpen their pencil and figure out how to deliver products at a lower price point and still defend their margins,” says Rowley. The key, say experts, is for brands to refresh shoppers’ memories, reintroducing themselves in order to justify their pricing. “Brands need to remind consumers that they like each other, and why,” says Vied. 

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