What we cover
For years, retailers have relied on aggregate data to steer their ships. If topline spending was steady and foot traffic was holding, there was no reason to make major adjustments. In fact, a recent poll of retailers at the start of 2026 found that 93% of businesses rated their financial health as “good” or better.
But beneath that calm surface, a significant fracture is forming. We are seeing two distinct groups moving in opposite directions, and strategies built for the middle are increasingly missing both.
At Upside, we’ve analyzed over 10 billion transactions across 21,000+ retail locations and surveyed 10,000+ consumers. We learned that shopping behavior diverges at the $75,000 annual household income line.
Those above it are more optimistic about the economy and budget their spending accordingly, while those below it feel they’re falling behind. Spending increases from the former group are masking that pullback from the latter.
In plainer terms, we’re calling it the “income divide.”
Read on for what it means and how retailers can respond.
The paradox in the data
On paper, the economy looks resilient. From 2024 to 2025, fewer shoppers said they were cutting back their spending. However, this "stability" is a mask.
When you peel back the layers, a hard line emerges at the $75,000 household income mark.
- Higher-income households are reporting greater economic optimism (only 39% said the economy in 2025 was worse than the previous year) and are increasing their spending across gas stations, grocery stores, and restaurants.
- Lower-income households are in a much tougher spot, with 58% reporting the economy felt worse. For these shoppers, spending is down across the board — not just in discretionary areas like restaurants, but also in more essential categories like gas and grocery.
Capturing consumer preferences in two simple questions
Retailers must understand that these two groups are no longer asking the same questions when they enter a store.
Higher-income: "Is this worth it?"
For households making more than $75,000 per year, price is rarely the primary gatekeeper. In grocery and restaurant categories, these shoppers prioritize in-stock items, quality, and convenience over the lowest price.
Interestingly, they also appear more likely to be loyalty “super-users." Higher earners actually hold nearly double the loyalty memberships of lower earners (3.7 vs 2.1 in the fuel category) as they seek to selectively optimize their spend.
Lower-income: "Can I afford this?"
For households under the $75,000 line, price is the first thing that matters across each retail category in our survey. They are trading down, consolidating trips, and sometimes even buying less food just to make ends meet. If a retailer doesn't offer obvious, easy-to-understand value, these shoppers simply won't make the trip.
The risk of the "average" strategy
If you treat these two groups the same, you risk a scenario where you fail to capture profitable visits from any customer:
- Over-discounting to higher-income shoppers who would have bought the item anyway, thereby eroding your margins.
- Under-saving for lower-income shoppers, causing them to skip the trip entirely because the value isn't high enough to justify the spend.
Ready to dive deeper into the data?
Download Upside’s latest report to see the full breakdown and learn how your business can adjust its strategy for the reality of 2026.
