Every year the headlines say this is the year the American consumer finally breaks. Sentiment falls, prices rise, and analysts wait for the cliff. Every year shoppers keep spending. The more useful question for anyone who owns, leases, or lends on retail property is not whether consumers are spending. It is what they are spending on, and which consumers are doing it.
Elizabeth LaFontaine, Director of Research at Placer.ai, gave one of the clearest answers I have heard when she joined me on The Real Finds Podcast. Her short version: the economy is splitting in two, and in both halves people are still buying small things that make them feel good.
Two Consumers, One Economy
The K-shaped economy describes a recovery in which one group moves up while another moves down. Elizabeth sees it directly in the foot traffic data. Upper income shoppers still have a lot of room in their budgets and keep spending across categories. Lower and middle income shoppers are increasingly constrained, and they are shifting toward value.
She traces the split to the period right after the pandemic and says the gap has only widened over the past six or seven years. The result is pressure on the middle. Classic full-price retail channels and categories are being squeezed, because the shoppers who once filled them are either trading up or trading down.
A Consumer Pulled in Two Directions
What struck me most was Elizabeth’s description of the shopper as two opposing forces at once. On one side, consumers are watching their personal finances and the broader economy more closely than ever. On the other, they are still impulsive, easily influenced, and genuinely love to shop.
Those forces have produced a shopper who reacts quickly. Consumers read what is happening around them and act on it almost immediately. Elizabeth’s clearest example is fuel. In Placer.ai’s 2026 data, gas prices above roughly $4 per gallon nationally triggered real changes in behavior: shoppers switched categories, visited less often, and shifted channels. Very few other economic signals have moved behavior that decisively.
Where the Money Goes: Value First
When budgets tighten, the spending does not disappear. It moves. The strongest growth Elizabeth sees is in value channels: off-price chains such as T.J. Maxx, Marshalls, Ross, and Burlington, dollar and discount stores, and Five Below.
Part of their appeal is price, but part of it is behavioral. Off-price stores offer a treasure hunt. Shoppers know the merchandise changes often and that if they see something they want, they need to buy it now. That gives value shoppers a reason to come back every week, which is exactly the kind of repeat trip a shopping center owner wants.
Elizabeth also pointed to what she calls mission-driven shopping. Since the pandemic, consumers have spread their trips across more retailers and visit them more often, comparing prices and researching before they leave home. She expects that habit to outlast the current cycle, even if household budgets improve, because shoppers are now trained to do it.
The Rise of Small Indulgences
When I asked Elizabeth what the retail industry should be talking about more, she did not pick a headline category. She picked small indulgences.
Her point is that in uncertain times, the industry tends to watch only the top line: are people buying more, or less? The better question is what they are buying more of. Retail has long seen certain categories, beauty products in particular, hold up during downturns because they offer an affordable treat. Elizabeth sees that idea spreading well beyond beauty. Crafting categories, bookstores, and games such as mahjong are drawing shoppers who want to celebrate small wins and spend time with family and friends.
Bookstores are the most striking example. They were the first retail category disrupted by e-commerce, and Amazon itself began as a bookstore. Elizabeth said physical bookstore traffic is now growing again, with more local bookstores opening across the country. Twenty-five years after the disruption began, shoppers are choosing to buy books in person because the visit itself is part of the value.
She expects small indulgences to expand in more meaningful ways over the next few years. I think that is right, and it fits the rest of her data. A constrained consumer may skip the big purchase, but still spends on something small, social, and satisfying.
Why This Matters for Retail Real Estate
Small indulgence tenants and value tenants share an important trait. Both create frequent, repeat visits. A craft store, a bookstore, a game shop, or a beauty retailer gives shoppers a reason to come back, and repeat trips benefit every other tenant in the center.
That connects to another point Elizabeth made about tenant mix. Grocery anchors create the routine trip, but the centers performing best surround the grocer with a diverse mix of lifestyle, dining, service, and value tenants. Small indulgence retailers fit naturally into that mix, often in smaller footprints that work well in neighborhood and open-air centers.
She also redefined what experience means in retail. Experiential retail as it was pitched before 2020, built on technology and spectacle, is overrated in her view. What matters now is good customer service and whether the shopper leaves feeling satisfied and feeling they got value. Small indulgence retailers tend to win on exactly those terms.
What Owners and Lenders Should Take From It
For owners and lenders in Lake County, Illinois and across the Chicago suburbs, the K-shaped consumer changes how a center should be read:
- Know which leg of the K your trade area serves. A center surrounded by upper income households and one serving value-focused households need different tenants.
- Treat value tenants as traffic drivers. Off-price and discount anchors bring repeat visits that support smaller tenants nearby.
- Make room for small indulgences. Bookstores, craft and hobby retailers, beauty, and gathering-oriented concepts can fill smaller suites and give shoppers a reason to stay.
- Watch fuel prices. Above roughly $4 per gallon, shoppers visit less and shift where they spend, which shows up in tenant sales before it shows up in rent.
- Underwrite the lasting trends. Elizabeth’s view is that the K-shaped split and mission-driven shopping are durable, not cyclical.
For current Chicagoland market conditions, see the daily-updated RFP Chicagoland Commercial Real Estate Index. If you are leasing, buying, or repositioning a retail center, our brokerage, management, and development team can help you match the tenant mix to the shoppers your center actually serves. Catch the full conversation with Elizabeth on The Real Finds Podcast.
Van Vlissingen and Co. has been the Midwest’s oldest commercial real estate brokerage, development, and management firm since 1879, and today is independently ranked the #1 commercial real estate agency in Chicagoland, home to the #1 independently ranked agent, Gordon Lamphere, and the region’s #1 ranked commercial property management team. If you own, lease, or invest in retail, shopping center, or mixed-use property across Lake County, the North Shore, the Northwest and O’Hare corridors, DuPage and the I-88 corridor, Will County, or southern Wisconsin’s Pleasant Prairie, Kenosha, and Racine markets, contact Van Vlissingen and Co. at 📞 847-634-2300 or 🌐 vvco.com. For a market-wide view of where these dynamics sit today, see our State of the Chicagoland Commercial Real Estate Market for Q3 2026.