--- title: "American consumers are delivering a retail reality check as they laser in on bargains" type: "News" locale: "en" url: "https://longbridge.com/en/news/296614962.md" description: "Major retailers like Walmart, Target, and Home Depot report that consumers are employed but increasingly disciplined, prioritizing bargains and essentials over big-ticket items due to high inflation and gas prices. While foot traffic remains stable or rises, spending per visit is flat or declining. This 'defensive' consumer behavior has led to stock declines for some retailers despite profit beats, as investors worry about future outlooks in a softer spending environment." datetime: "2026-08-21T12:00:18.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/296614962.md) - [en](https://longbridge.com/en/news/296614962.md) - [zh-HK](https://longbridge.com/zh-HK/news/296614962.md) generator: "portal-rs" --- # American consumers are delivering a retail reality check as they laser in on bargains By Bill Peters Recent earnings results suggest that the typical shopper is 'employed, still spending and increasingly disciplined about it' A customer shops at a Walmart store in Miami on Aug. 20. Walmart said Thursday that shoppers are being more discerning with their spending. Consumers aren't broke, but they are being more selective about what they buy, and that's becoming more of a problem for major retailers. Case in point: Walmart's stock (WMT) fell 9.2% on Thursday as investors looked beyond the company's latest profit beat, instead focusing on a disappointing third-quarter outlook and management's commentary about the pressures that shoppers currently face in an era of high inflation and elevated gas prices. "When the sector's strongest operator gets punished for a beat, it says the market has concluded that this level of consumer spending is roughly as good as it gets for now - and that valuations had assumed something better," Bryan Hayes, a strategist at Zacks Investment Research, told MarketWatch. Target (TGT) and Home Depot (HD) also reported quarterly results this week. Their financials showed that consumers are still visiting stores but spending less aggressively per visit, Hayes said. He suggested that shoppers have gotten wiser, but not necessarily worse off. "That is not a weak consumer - it is a deliberate one," he said. "People are making more frequent, smaller, more considered trips, which is classic value-seeking behavior." Hayes said consumers had stopped absorbing price increases and were migrating to the biggest and cheapest stores as they hunted for deals and tried to manage higher costs of living. But he also highlighted a divide between spending on essentials and spending on big-ticket items. Anything resembling a larger project, he said, had been put on hold. "This is a consumer who is employed, still spending and increasingly disciplined about it," Hayes added. "Not fragile - but defensive." At Target, he noted, consumer foot traffic rose 3.6% in the second quarter, but spending per trip was flat. At Walmart's U.S. locations, traffic was up 1.5%, but per-trip spending trailed that figure, ticking 1.1% higher. And at Walmart's Sam's Club, he said, shoppers' visits rose 7%, but they spent 2.5% less per visit. The results from the retailers arrived as consumers are dealing with higher prices for basics. Average U.S. gas prices are floating around $4, according to AAA, while the artificial-intelligence boom has pushed up costs for energy and less-essential goods like electronics. More details on the state of the consumer will emerge when Costco Wholesale (COST) and smaller specialty retailers report in the weeks ahead. Over recent weeks, sentiment among executives at hotel chains such as Hilton (HLT) and consumer-goods giants like Procter & Gamble (PG) have been mixed. Walmart Chief Financial Officer John David Rainey said Thursday that the company was dealing with "arguably a softer consumer environment than in February." Management expressed confidence that could it lean on planned investments to cut prices over this year to gain market share. But Rainey also noted "some incremental pressure on the consumer relative to the beginning of the year" as gas prices have risen. "As you go through month by month in the last quarter, you can tell when fuel prices increase and got above $4, and perhaps there's a psychological impact to that, that there are choices that consumers are making," he said. "So June was a little more obvious as we look at the quarter in terms of customers making trade-offs," he continued. "And it's why we have leaned so heavily into lower prices." On Wednesday, investors cheered signs that Target's turnaround plans were working. But consumers were still wary of buying things like clothing and home goods, and management said the latter category was at the start of "a multiyear journey" to get back on track. CEO Michael Fiddelke said that clothing and home goods were the categories most in need of fixing at Target. He also emphasized that Target had "much more work to do" to win back consumers, who have gravitated to rivals that have been able to offer deeper discounts. Both Target and Walmart have cut prices on thousands of items over recent months in an effort to retain consumers. Elsewhere, executives at Home Depot on Tuesday said that consumers were diving into smaller home-repair projects. The company saw gains in its plumbing, kitchen and gardening sections. However, Home Depot Chief Financial Officer Richard McPhail said "consumer uncertainty and housing affordability continue to pressure demand for larger home improvement projects." Lowe's (LOW), meanwhile, cited "persistent macro pressures" and "softer DIY discretionary" spending. U.S. retail sales in July showed their biggest drop in 14 months, albeit due to cheaper fuel and a cooldown from Amazon's (AMZN) summer-season sales. Brian Mulberry, chief market strategist at Zacks, said over email that the figures were a sign that consumers were easing up on discretionary spending. He pointed to declines in costlier purchases related to automobiles, electronics and appliances. "I would take away that the bifurcated economy still exists and asset owners are doing well while non-asset owners are being left behind during this continued bull market," he said. -Bill Peters This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal. (END) Dow Jones Newswires 08-21-26 0800ET ### Related Stocks - [HD.US](https://longbridge.com/en/quote/HD.US.md) - [WMT.US](https://longbridge.com/en/quote/WMT.US.md) - [TGT.US](https://longbridge.com/en/quote/TGT.US.md) - [WMTI.US](https://longbridge.com/en/quote/WMTI.US.md) - [COST.US](https://longbridge.com/en/quote/COST.US.md) - [HLT.US](https://longbridge.com/en/quote/HLT.US.md) - [PG.US](https://longbridge.com/en/quote/PG.US.md) - [LOW.US](https://longbridge.com/en/quote/LOW.US.md) ## Related News & Research - [WMT Stock Slides as Walmart Same-Store Sales Disappoint](https://longbridge.com/en/news/296524455.md) - [Walmart stock is having its worst day in years. 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