Value Retailers Thrive Amid Cautious U.S. Consumer Sentiment Ahead of Black Friday

Value retailers experienced significant price gains between Nov 25-26, 2025: Walmart (WMT) +4.05% [2], TJX Companies (TJX) +2.45% [2], Dollar Tree (DLTR) +8.05% [3], Dollar General (DG) +5.59% [3]. This performance reflects a broad trade-down trend driven by persistent inflation (Oct 2025 CPI:3.25% YoY [5]) and record-low consumer sentiment (University of Michigan Index:51 [4]). The Consumer Defensive sector outperformed Consumer Cyclical (0.895% vs.0.490% [3]), with investors viewing value retailers as safe havens amid economic uncertainty.

Key cross-domain insights include upper-income households participating in trade-down behavior—Walmart reported 75% of share gains from upper-income groups [0], indicating the trend extends beyond lower/middle-income segments. TJX’s off-price model (Marmaxx, HomeGoods) benefited from both value and convenience, driving 3% comp sales growth [1].

1. Broad Trade-Down Trend
   : The shift to value is not limited to lower-income consumers, with upper-income households increasingly choosing budget options.
2. Sector Rotation
   : Defensive retail outperforms cyclical, signaling investor preference for stability in uncertain times.
3. E-Commerce Growth
   : Walmart’s 22% Q3 e-commerce growth [0] enhances its competitive edge in value retail.

: Value retailers can expand market share via private label offerings and convenience (e-commerce, store locations). TJX’s international expansion (Spain entry in 2026 [1]) provides long-term growth potential.
: Weaker-than-forecasted holiday spending (due to record-low sentiment [4]), margin pressures from GLP-1 drugs (Walmart [0]) and tariffs (TJX [1]), and potential competition from mid-tier retailers increasing promotions.

• Value Retail Gains
  : WMT (+4.05%), TJX (+2.45%), DLTR (+8.05%), DG (+5.59%) [2][3].
• Macro Indicators
  : Inflation (3.25% YoY [5]), consumer sentiment (51 [4]), holiday spending forecast ($1T+ [4]).
• Factors to Monitor
  : November retail sales, actual holiday spending data, consumer sentiment trends in December, and post-holiday margin performance of value retailers.