What: Middle- and lower-income US consumers are changing their shopping habits due to economic pressures, driving retailers like Macy’s to adapt with more private-label offerings.

Why it is important: The trend reflects a broader realignment in consumer loyalty and spending, with retailers adapting strategies to maintain relevance amid inflation and tariff impacts.

The concept of an E-shaped economy, introduced by Macy’s CEO Tony Spring, captures the growing divergence in US consumer spending, particularly as middle- and lower-income households face mounting economic pressures. While upper-income consumers continue to seek newness and fashion, those in the middle and lower tiers are increasingly forced to prioritise essential purchases and seek value, often turning to private-label and bargain retailers. Macy’s has responded by expanding its in-house product lines, aiming to attract price-sensitive shoppers and maintain competitiveness as brand loyalty wanes. Broader industry trends show that food and department store retailers are also adjusting their strategies, with many consumers now planning purchases around deals rather than specific brands. The shift is further fueled by inflation, geopolitical tensions, and tariff policies, which have widened the gap between high- and middle-income wage growth and made affordability a central concern. As a result, retailers must innovate and optimise their offerings to remain relevant in a fragmented and volatile market.

IADS Notes: The emergence of the E-shaped economy, as described by Macy’s CEO Tony Spring, reflects a retail landscape increasingly defined by consumer segmentation and value-driven behaviour. Recent analyses confirm that ongoing economic uncertainty is prompting both caution and selectivity among shoppers, with middle-income consumers especially sensitive to inflation, tariffs, and geopolitical instability (Alix Partners, Dec 2025; Financial Times, Oct 2025). Macy’s strategic pivot toward private-label products mirrors broader industry trends, as retailers seek to build loyalty and profitability by offering affordable alternatives to name brands (Bloomberg, Dec 2025; The Economist, May 2025). The shift is further evidenced by the growing appeal of discount and dollar stores, which are attracting a wider demographic, including higher-income households, and accelerating the decline of traditional brand loyalty (Financial Times, Dec 2025). As price sensitivity intensifies, retailers are compelled to overhaul supply chains, optimise inventory, and emphasise operational resilience, underscoring the need for agility and innovation in a fragmented and volatile market.

Macy’s CEO points to e-shaped economy, signalling consumer shift