Retailers say resilient shoppers are focusing on value
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American shoppers are still spending — but they're becoming pickier about where their money goes.
Why it matters: Results Thursday from Dollar Tree, Burlington, Best Buy and Kohl's suggest that consumers are still willing to spend on bargains and small indulgences — yet are becoming increasingly selective as higher gas prices and other everyday costs pressure household budgets.
The big picture: Retailers gaining traction right now are the ones giving shoppers clear value, convenience or a reason to spend.
- Dollar Tree CEO Mike Creedon said customers remain "value focused" as higher fuel prices and broader economic uncertainty pressure budgets.
- "People still want to treat themselves," Creedon said, describing Dollar Tree as a "guilt-free" option for shoppers looking for affordable indulgences.
By the numbers: Dollar Tree posted 3.5% comparable sales growth and raised guidance.
- Off-price Burlington reported 6% comparable sales growth and lifted its outlook.
- Best Buy surprised analysts with 2% comparable sales growth.
- Kohl's posted its best comparable sales performance in more than four years.
- Costco reported 9.8% comparable sales growth later Thursday.
What they're saying: Burlington CEO Michael O'Sullivan offered a simple explanation for the current retail environment: "The customer is voting for value."
- Neil Saunders, managing director at GlobalData, said Dollar Tree's results suggest financially pressured consumers are cutting some discretionary trips while still relying on value retailers for essentials.
- Costco executives said higher gas prices drove record fuel demand during the quarter as shoppers became increasingly price sensitive, though members were still willing to splurge on some higher-end products when the value felt compelling.
Between the lines: Discount and off-price chains continue to benefit from trade-down behavior as consumers stretch tighter budgets further.
- Dollar Tree said it sees more value-focused shopping across income groups, while Burlington said shoppers continue to prioritize affordability.
- Kohl's CEO Michael Bender described shoppers as "sitting around their kitchen table trying to make life work" as they juggle gas, food and utility costs.
- Lower-priced store-owned brands, expanded coupon eligibility and value-focused merchandising helped bring core customers back into stores, Kohl's executives said.
Yes, but: Thursday's earnings also showed consumers are still willing to spend on discretionary products when they feel they are compelling enough.
- Best Buy CEO Corie Barry said shoppers remain "value focused and attracted to sales moments," but are still willing to spend on higher-ticket technology products "when they need to or when there is technology innovation" — particularly in gaming, computing and mobile phones.
- Best Buy also said it expects some technology prices to rise later this year as higher memory costs flow through the industry. Some gaming systems have already started raising prices.
- Gap Inc. also reported its ninth consecutive quarter of positive comparable sales, helped by stronger performance at Gap and Old Navy.
The bottom line: In this economy, retailers aren't just competing on price — they're competing for justification.
Editor's note: This story has been updated with Costco and Gap Inc.'s earnings.
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