Confidence and country: How consumer economic outlook shapes domestic country bias

Amid ongoing economic uncertainty, retailers are increasingly concerned by declining consumer preferences for domestic products—an issue that conventional “buy local” marketing has struggled to address. This research investigates whether consumer confidence (CC) can explain shifts in domestic country bias (DCB) and how retailers might respond more effectively. Anchored in social identity theory, we propose that CC enhances DCB by reinforcing national identity. We test this model using a cross-sectional survey of consumers in the United States and two controlled experiments in China. The results consistently show that national identity mediates a positive relationship between CC and DCB. Notably, when CC is low, self-focused buy local marketing appeals help to sustain DCB—but only for high-typicality products (e.g., Chinese herbal tea). This research contributes new theoretical insights into why economic conditions affect DCB. We also provide actionable recommendations for retailers seeking to maintain consumer engagement with domestic offerings when CC declines.