Where People Are — and Are Not — Shopping Right Now

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.

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.

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.

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.