Are consumers spending less? And if so, what can merchants do about it?

What the data is really saying

Consumer sentiment isn’t in freefall, but it isn’t soaring either. Deloitte’s financial well-being index tracks shifts in how people feel about their ability to pay upcoming bills, save, and manage money day-to-day. Today, globally, the index is back up to where it was in April 2020. Sentiment has recovered from pandemic lows but is not yet robust by historical standards. That suggests a cautious consumer, not a defeated one. But does this relatively low level of consumer confidence explain the challenges merchants are facing? Not really…

When consumers intend to spend less, what do they actually do?

There is a disconnect between what people say they’ll spend and what they actually do. A striking study by McKinsey reveals that stated intent is a poor predictor of real purchases. People said they would spend less on furniture, but actually spent more. They said they planned to spend the same on groceries, but actually spent less.

And we probably all notice a similar effect around us. During “tough economic times” some retailers are struggling, or even closing. Yet others are thriving. So what’s the difference? Why, with the same level of consumer confidence, and the same economic situation, do some merchants struggle whilst other see business booming?

A simple model for wallet share

By looking at the data for which categories people are spending more or less in, as well as research into what drives people’s purchasing choices, the Worldline Discovery Hub has developed the following practical model:

In tough times, shoppers anchor their decisions on two impulses:

1. Value-for-money. When money is tighter, people still need essentials. And what the research shows is that consuming less is the absolute last-resort. People first try to control their spending by, for example, reducing wastage, buying store-brand products, or less expensive cuts of meat. In other words they are looking for the same (or similar) outcomes, but for less money. We believe that, in this context, merchants win by positioning themselves as offering good value for money. It’s worth noting that this is not necessary about the actual price of goods, but rather whether a customer is perceiving it as a money-saving option.
2. Treats and splurges. More surprisingly, there is evidence that people still want to splurge and treat themselves with purchases that are not essential, but will bring them joy. Once again, note that this is about positioning rather than absolute cost. A luxury holiday can be perceived as a treat, but so can a takeaway pizza.

The danger zone is the “squeezed middle,” where neither value nor mood-to-splurge is clearly activated. Merchants who don’t clearly appeal to one of these instincts risk losing wallet share.

Expanding on this model, it’s important to understand that consumer spending habits are deeply influenced by their emotional and psychological state during economic uncertainty. The value-for-money impulse reflects a practical mindset where consumers are actively seeking to maximize their purchasing power without sacrificing quality or satisfaction. This often translates into increased interest in discounts, loyalty programs, and products that offer long-term benefits or durability.

On the other hand, the treats and splurges impulse highlights the human need for emotional reward and comfort, especially during challenging times. These purchases often serve as acts of self-care or celebration, helping consumers maintain a sense of normalcy and happiness. Retailers can tap into this by offering experiences or products that feel indulgent yet accessible, such as limited-edition items or personalized services.

Merchants who understand these dual drivers can tailor their marketing, product offerings, and payment experiences to better align with consumer expectations. For instance, clear communication about value and savings can attract budget-conscious shoppers, while seamless checkout options and targeted promotions can encourage spontaneous treat purchases.

Ultimately, the most successful businesses will be those that recognize the nuances of consumer behavior in a fluctuating economy and adapt their strategies accordingly, balancing affordability with the desire for enjoyment and reward.

What this means for payments and the checkout experience

The payment moment is a critical tie-in between pricing strategy and the shopper’s emotional state. How you structure the checkout can amplify your position.

If you’re leaning into value-for-money, the payment experience should reinforce this. The point of sale is a moment in the overall customer experience where the bargain price can be further emphasised by highlighting savings or reward points. To boost revenue, it is also a moment where upselling specifically targeting the value-for-money instinct (e.g. would you like to buy one more for half price?). Positioning in this way naturally puts a pressure on margins, and therefore cost-efficient payment acceptance is also key.

If your strategy focusses on treats and splurges, then the priority shifts. Almost by definition, a treat or splurge is not an essential purchase and therefore the risk of sale abandonment is higher. The priority is then to offer simplicity, and a frictionless flow. The smoother the payment process, the less friction there is to abandon the cart. The consumer should be able to pay quickly with their preferred method, with minimal steps, and with clear, calm confirmations that reinforce the emotional payoff of the purchase.

A practical approach you can apply to optimize your payment strategy and boost sales

Start with positioning. Decide whether you are primarily value-for-money or experience-driven. Your payment strategy should reinforce that stance and be consistent with the shopper’s expectations for your brand.

Then optimize payments around that positioning:

• For value-focused retailers: provide transparent discounts and design upsell options that feel like real savings. Ensure acceptance is broad but optimized for cost, so you don’t erode margins on low-margin items.
• For experience-focused retailers: prioritize speed and convenience. Offer a wide range of trusted payment methods, minimize the number of steps to complete a transaction, and lean into post-purchase reassurance that the experience was effortless and enjoyable.

What Worldline has learned about consumer spending habits in challenging economic times

Working with merchants across sectors has reinforced these two ideas: first, value for money matters most when the economy is uncertain; second, people still want to treat themselves. The way price and value are perceived can redefine what a win at the checkout looks like.

That means that payment acceptance can’t be a back-office afterthought. It’s a strategic lever that can shape perceived value, reinforce brand positioning, and influence shopper behaviour in real time.

Want to go deeper?

If you’d like a concise infographic that highlights the key facts and figures on this subject, we’ve prepared one. And if you’d like to discuss how Worldline can tailor a payment and checkout strategy to your audience, we’re ready to help. Our team thrives on helping merchants thrive, no matter what the economy throws at us.