The data: The majority of shoppers have actively reduced discretionary spending, but their willingness to cut back depends on the category, according to VML’s The Future Shopper 2026 report.

• 60% of global consumers have cut back on discretionary spending due to financial concerns and higher costs for goods and services.
• But their appetite for small luxuries remain: Clothing, coffee and hot beverages, and skincare and beauty products were among the categories consumers were least likely to cut, even if it meant reducing spending elsewhere.

The trend: Despite—or perhaps because of—the challenging macroeconomic environment, shoppers are holding fast to small luxuries. More consumers surveyed by VML said they would opt to maintain spending on clothing (43.9%), coffee and hot beverages (35.6%), and skincare and beauty (33.1%) than the proportion that cited car maintenance (31.8%) and savings and investments (29.1%) as essential spending.

The idea of the “treat economy” resonates particularly among Gen Zers. For many, the act of buying a matcha latte or new beauty product is a mood booster that helps them cope with other stressors, financial or otherwise. Fifty-two percent of Gen Zers treat themselves daily or multiple times per week, with categories like jewelry, clothing, beauty—and even ice cream and baked goods—benefiting from an increase in spending from the cohort, according to the Bank of America Institute.

Implications for retail: While consumer spending is increasingly being directed toward essentials, households are making room in the budget for indulgences. That creates an opening for retailers to drive discretionary spending: 64% of US adults consider deserving a treat or reward to be a top motivator for an impulse purchase, according to a PartnerCentric survey.

Offering products that are new, novel, or limited-edition can help get shoppers’ attention while increasing the odds of an impulse purchase. Likewise, scaling items down—such as offering mini versions of beauty products or snacks at affordable price points—can get otherwise cautious consumers to add items to their cart.