How Tariffs, Interest Rates & Geopolitical Tensions Are Shaping US Retail Right Now

Consumers across the nation are cautiously optimistic about the current state of the United States. However, many of us may feel a tad more positive this month than earlier this year (hello summer!), but most remain rather concerned about potential economic slowdowns and increasing prices. 

Key insights into shifting retail spending habits from Consumer Edge

A new report from Consumer Edge, which tracks consumer behavior worldwide, confirms what many are experiencing firsthand: people are cutting back on non-essential purchases and sticking to necessities as their spending priorities shift. The report reveals that ongoing economic uncertainties, such as potential tariffs and international conflicts, are making consumers rethink where and how they spend their money.

Shoppers are increasingly moving away from traditional shopping patterns, with many choosing budget-friendly stores over their usual retailers, according to the report, which analyzes data from 2024 to 2025. Highlighting a broad shift in how and where Americans shop today, this change is noticeable among certain age groups (Baby Boomers, Millennials, and Gen Z)  and income levels who are prioritizing affordability as economic pressures mount.

Affluent shoppers turn to Walmart and Dollar General for essentials

One of the most surprising shifts noted in the report was found among affluent shoppers. According to the report, consumers earning over 150,000 US dollars annually are increasingly turning to value retailers like Walmart and Dollar General for their essentials. Covering all age groups, this change in spend extends to younger demographics as well, with the 18 to 34 age group also gravitating toward these budget-friendly options, demonstrating that the search for value has become universal rather than income-dependent.

Meanwhile, discount retailers are experiencing remarkable growth momentum during these uncertain times. Dollar Tree and Five Below have posted impressive double-digit growth rates since mid-April 2025, capitalizing on consumers’ heightened price sensitivity. Unsurprisingly, Amazon continues to dominate the ecommerce space with consistent high single-digit growth, maintaining its position as America’s leading online retailer even as shopping patterns evolve.

However, not all value retailers are benefiting equally from these changes. Warehouse clubs like Costco, BJ’s, and Sam’s Club are seeing their growth rates moderate after experiencing elevated levels a few years back. An evident slowdown, this change reflects consumers pulling back from bulk purchasing behaviors that had previously driven these retailers’ success during stock-up periods.

Is Target losing its appeal among affluent consumers?

One retailer in particular facing unique challenges in this shifting retail landscape is Target. Unlike Walmart’s success in attracting higher-income customers, Target’s new customer base increasingly skews toward older and lower-income shoppers, according to the report, suggesting the retailer may be losing its appeal among affluent consumers who are tightening their discretionary spending. It also potentially signals that Target’s signature ‘cheap chic’ positioning no longer resonates as strongly with younger, fashion-conscious buyers as it may once have. 

Geographic patterns are also emerging in these retail changes. Dollar stores and discount chains continue their dominance in rural markets through aggressive expansion, while urban consumers seem to prefer warehouse clubs and ecommerce platforms. However, Amazon’s rapid delivery network expansion could eventually blur these geographic distinctions as convenience becomes increasingly accessible across all markets.

Customer loyalty patterns reveal another layer of complexity in this evolving retail environment. Established giants like Amazon, Walmart, and Costco benefit from deep brand loyalty that translates into strong customer retention rates. In contrast, dollar stores operate with lower retention rates, reflecting their transactional, value-driven model that attracts price-sensitive shoppers who tend to shop more opportunistically rather than develop lasting brand relationships.

“Consumers are making deliberate choices as they navigate the impacts of inflation and broader economic uncertainty,” said Michael Gunther, Vice President, Head of Insights, at Consumer Edge, in a statement. “This shift isn’t just about cutting back—it’s about redefining value. We’re seeing even affluent and younger shoppers prioritize convenience and cost in ways we haven’t seen before.”