Walmart and dollar stores attract budget shoppers; Target continues to face heat in 2025

The S&P 500 Consumer Discretionary Distribution and Retail index .SPXRT was up 4.7% YTD, while the S&P 500 index .SPX was up 17.3%

Retailers including Walmart WMT.O, Target TGT.N, and Kroger saw leadership shake-ups in 2025, as consumer companies seek fresh strategies to revive growth and navigate shifting customer trends amid economic uncertainty

Walmart shares jumped ~24% this year, after the retailer's strong performance, helped by middle to higher income consumers who are now shopping at its stores for affordable essentials while other income streams such as marketplace, Sam's Club, Walmex stores also support profit growth

Demand for cheaper necessities across income groups also drove sales at Dollar Tree DLTR.O and Dollar General DG.N, with shares jumping 66% and ~80% YTD, respectively

Off-price retailer TJX's TJX.N shares were up ~29% this year, logging its biggest annual gain since 2019, while Ross Stores ROST.O up ~20% this year betting on resilient demand for its discounted apparel and accessories

Inversely, Target TGT.N stock logs its fourth straight year of decline at 28% YTD as its heavier reliance on discretionary categories like apparel and home goods made it less attractive to budget-conscious consumers

Growing pressure on lower-income consumers caused some trouble for grocer Kroger KR.N, even as the company works to revamp its e-commerce strategy; shares up 2% YTD