Who wins when the consumer gets choosier?

With the global consumer under pressure from squeezed real incomes, weak confidence and rising living costs, we examine what this means for consumer-facing companies. Across the companies we cover, this environment has generated a consumer who is harder to impress and far choosier about where they will spend their hard earnt cash. 

Who are the winners?

As an equity research team covering a diversified set of consumer-facing industries spanning the likes of fashion, sportswear, luxury goods, travel and coffee chains, we continuously track the strength of the consumer, comparing how different sectors and business models perform under varying conditions. 

In our view, the consumer is holding up better than expected, but brands are having to work much harder to earn every pound spent. The strongest performers are those delivering value, newness, and tight inventory, while building loyalty through seamless digital experiences and still investing for growth. Weaker areas rely on less predictable drivers like tourism or China, push pricing too hard or face longer brand rebuilds.

Take Inditex, one of the clearest examples of a consumer name still delivering growth, even as shoppers become more selective. The fashion retail giant, which owns Zara, Bershka, Pull & Bear and Massimo Dutti, reported record annual sales and strong demand for its spring and summer fashion collections in March. Online is growing faster than stores, but Inditex is making both work, using smarter, more digital shops, from self-checkouts at Zara to app-based video shopping at Pull & Bear. We believe brands like Zara and Massimo Dutti sit in a sweet spot – design-led enough to feel current, but accessible enough for shoppers who may be more cautious about higher-ticket purchases.

In contrast, Nike, which has been challenged by higher tariffs and falling sales in China, shows brand strength alone is not enough. The brand remains powerful, with good momentum in performance – especially running – and a recovery underway in North America. But the broader rebound is slower: the sportswear market is still under pressure, digital remains promotional, and China is a drag. Success now depends on having the right products and managing supply with discipline. While the rebound is taking longer than expected, we remain confident in the strength of the business.

Meanwhile luxury is seeing a tentative pickup, particularly in the US and Asia, with jewellery standing out. However, demand is patchy. Fashion and leather goods remain under pressure, tourist spending in the luxury space is weaker, and the backdrop is less predictable. Unlike value-driven retail, luxury needs confidence: to trade up, to travel, and to justify premium pricing. That confidence is weaker today, so pricing power has to be earned, not assumed.

The travel sector more broadly is, perhaps surprisingly, a relative bright spot despite recent geopolitical disruption making the near term less clear. For example, Booking’s results showed demand is holding up, particularly in the US, and that it is gaining share despite challenges to the market. It has benefited from strong growth in ticket sales for flights and attractions, alongside stronger app usage, loyalty and direct bookings. AI is starting to enhance the experience, but trust and convenience remain key. While overall travel demand is still healthy, it is more exposed than most categories to shocks, making platform strength and reliability increasingly important.

Starbucks shows the other side of the consumer: coffee is discretionary, but also habitual and affordable. Its turnaround highlights that people are still willing to spend on small, everyday treats if the experience is right.

Regional divergence is becoming increasingly clear. The US consumer remains relatively resilient, supporting demand across categories, from Starbucks and Nike to Booking and LVMH. China is more mixed, with some signs of recovery but uneven spending patterns. Europe and Japan are softer, particularly for luxury, where weaker tourism and currency shifts are weighing.

A shared theme is continued investment to strengthen the customer offering. Inditex is upgrading stores and digital, Starbucks is improving the in-store experience, Booking is advancing mobile, loyalty and AI, and Nike is investing in product, brand and distribution In this environment, strong execution of the consumer experience is what sets companies apart.

What does this mean for investments?

Markets are rewarding delivery, not promises. Companies improving the customer proposition now are being recognised, while those relying on future turnarounds are lagging.

Performance gaps are widening, making stock selection far more important than sector exposure. It’s not just luxury – across sectors, businesses need to work harder to justify pricing and win over a more discerning consumer.

We see this as a stock pickers’ market. Success comes from identifying companies gaining share through stronger execution, not broad thematic calls. That’s why the focus is on tracking real-time shifts in consumer behaviour, comparing models across sectors, and prioritising clear evidence of delivery.