Consumption serves as the core engine for stimulating domestic demand. As the starting point of production and the beginning of the next cycle of reproduction, its influence permeates all aspects of the economic cycle, including production, exchange, and distribution. Currently, insufficient household consumption, particularly the inadequate development of service consumption, poses a fundamental constraint to the expansion and upgrading of consumption. From the perspective of “three new forms of consumption” (new scenarios, new business formats, and new models), this study introduces the “flywheel effect” to construct an analytical framework for promoting consumption expansion and upgrading. The study finds that new scenarios, through spatial reconfiguration and experiential enhancement, reshape consumer behavior and provide a foundation for the emergence of new business formats; new business formats evolve through supply diversification and value chain extension, further giving rise to new models; and new models, through institutional and mechanism innovation, activate latent demand while feeding back into the iterative upgrading of scenarios and formats. This study systematically identifies the constraints on the development of the “three new forms of consumption” and proposes key breakthrough paths: first, it is necessary to cultivate sustainable new consumption scenarios by strengthening firms’ digital-intelligent capabilities and improving the spatial quality of small and medium-sized cities. Second, it is essential to enhance the resilience and competitiveness of new business formats by focusing on supply-side quality improvement. Third, it is essential to improve institutional arrangements and risk governance by addressing cross-sector regulatory challenges, preventing consumption alienation, and fostering a healthy demand foundation to support the diffusion of innovative models.