Where people are — and are not — shopping right now
In a landscape marked by economic uncertainty, Walmart is successfully expanding its market share, appealing to both low- and high-income consumers. Recent earnings reports reveal that shoppers are becoming increasingly selective, prioritizing value in their purchases as consumer sentiment dips to its lowest since 2022. Rising job cuts and tariffs are contributing to this cautious spending behavior, prompting even wealthier shoppers to “trade down” and seek better deals. As Neil Saunders of GlobalData Retail highlights, it’s not merely about price; consumers are gravitating towards retailers that offer a compelling value proposition, resulting in a polarized market where some retailers thrive while others struggle.
Walmart’s robust performance is underscored by a 5.8% year-over-year increase in total revenue and a 4.5% rise in same-store sales. This growth is attributed to the retailer’s ability to attract upper and middle-income shoppers, enhancing its appeal across various demographics. Similarly, off-price retailers like T.J. Maxx and Ross Stores are experiencing significant gains, with T.J. Maxx reporting a 5% increase in same-store sales. These stores provide consumers with the opportunity to indulge without overspending, a sentiment echoed in the restaurant industry. Fast-casual dining chains such as Applebee’s and Chili’s are thriving by striking a balance between affordability and quality, effectively competing with fast-food options.
Conversely, the trend of selective spending has led to a decline in popularity for certain segments. High-priced, trendy dining options, often dubbed “slop bowl chains,” are seeing reduced patronage from younger consumers who are opting for grocery shopping instead. Companies like Sweetgreen and Chipotle have reported drops in same-store sales, indicating a shift in consumer behavior. In the retail space, Target is facing challenges due to operational inefficiencies, leading customers to seek alternatives. Meanwhile, home improvement projects are being postponed as consumers focus on smaller maintenance tasks, reflecting a broader trend of cautious spending across various sectors. In this evolving retail landscape, the quest for value transcends income brackets, underscoring the importance of perceived worth in consumer purchasing decisions.
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Walmart is gaining market share, appealing to low and high-income shoppers.
Jeffrey Greenberg/Universal Images Group via Getty Images
Shoppers are being more selective, leaning toward value spots like Walmart and T.J. Maxx.
With the economy feeling shaky, even wealthier shoppers are hunting for deals.
It’s not just about price: Consumers want value in their purchases.
Americans are spending selectively.
That’s the picture painted by this quarter’s earnings season, and it’s not surprising. Consumer sentiment is at its lowest level since 2022,
job cuts
are rising sharply, and
tariffs are making shopping trips
more expensive.
Lower-income shoppers aren’t the only ones feeling the heat. Analysts say well-off consumers are also “trading down” on some purchases and switching up their shopping routines to get better deals.
But shoppers aren’t just gravitating to the lowest-priced chains. While they are seeking value, it’s not just about price, Neil Saunders of GlobalData Retail told Business Insider.
“The consumer does not have enough spending power to lift all retailers. What we’re seeing is polarization: Some retailers are doing well, while others are failing,” Saunders said.
“It is somewhat easier for those offering low prices to do well. But it’s much wider than price — consumers want to feel they are buying well and getting bang for their buck,” he said.
Here’s a look at who’s in and who’s out this season.
What’s in: Walmart, preppy luxury, fast-casual dining, and T.J. Maxx.
T.J. Maxx keeps on trucking.
Scott Olson/Getty Images
Americans can’t get enough of
off-price stores
right now.
TJX, the parent of T.J. Maxx and Marshalls, reported a 5% rise in same-store sales in its most recent quarterly earnings, while Ross Stores reported a 7% climb in the same metric compared to the same period the year before. These stores are offering shoppers the chance to treat themselves without breaking the bank.
Meanwhile,
Walmart is solidifying
its grip on American dollars. The retail giant reported strong sales for the third quarter, with total revenue increasing 5.8% year-over-year and US same-store sales rising 4.5% versus the same quarter in 2024. It also said it continues to benefit from gaining more upper and middle-income consumers.
Restaurants are seeing the same pull. Diners want affordability and value for money. Fast-casual chains like
Applebee’s and Chili’s
are thriving because they offer just this.
“These guys have figured out what that magic price point is,” Phil Kafarakis, CEO of IFMA, The Food Away From Home Association, told Business Insider. It’s enabling them to compete with fast-food chains, he said.
“They said we’re going to make a bigger burger and you can sit in our place and be served, and it’s not going to cost you $12 to get a
Big Mac meal
,” he added. The price of this
McDonald’s meal
varies by location and comes with fries and a drink.
When it comes to apparel, the
all-American preppy brands
are having a moment. Gap, Tapestry-owned Coach, and Ralph Lauren all saw year-over-year sales growth in the most recent quarter.
Ralph Lauren has positioned itself as an affordable luxury brand. Plus, it sells products that are good quality and have a classic design, which means they can be worn many times, Saunders said.
What’s out: $15 salads, discretionary splurges, and mid-market retail.
Chipotle, Cava, and Sweetgreen said younger customers are frequenting their stores less.
Dixie D. Vereen/For The Washington Post via Getty Images
Trendy ”
slop bowl chains
” are cooling off right now.
Sweetgreen, Cava, and Chipotle
all said in recent earnings that they are seeing fewer frequent visits from their younger consumers. And it’s hitting their sales and stock prices. Sweetgreen’s same-store sales dropped 9.5%, Cava slowed to 1.9% growth, and Chipotle barely eked out 0.3% in this quarter versus the same period the year before.
“We’re not losing them to the competition. We’re losing them to grocery and food at home,” Chipotle’s CEO, Scott Boatwright, said of young diners in the company’s most recent earnings call.
When it comes to big-box retail,
Target is losing out.
Analysts say messy stores, long wait times, and locked-up products have put off consumers, and they are heading elsewhere.
What’s mixed: Home improvement and fast food.
Fast food is pricey now.
NurPhoto/Getty Images
Many Americans seem to be putting
home improvement projects
on hold for now.
In their most recent earnings calls, the titans of the sector — Home Depot and Lowe’s — said the era of big flashy makeovers is on pause right now, but the home improvement world isn’t dead either. Contractors are still working — but the focus is on smaller projects, maintenance, and repairs.
It’s just not big purchases that shoppers are more reluctant to make. Some of the more cash-strapped consumers are also turned off by
rising prices in fast food
.
Although McDonald’s saw its sales grow in the most recent quarter, it’s not an entirely rosy picture.
McDonald’s CEO Chris Kempczinski said in its most recent earnings call that sales from lower-income diners are falling right now. At the same time, it’s seeing more traffic from higher-income diners.
“I think sometimes there’s this idea that value only matters to low income, but value matters to everybody, whether you’re upper income, middle income, lower income,” Kempczinski said on the call.
“Feeling like you’re getting good value for your dollar is important,” he added.
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