The insight: Shoppers’ search for value is steering them to budget-friendly retailers—off-price chains, dollar stores, and other discounters—that benefited from a surge in sales and traffic in Q2.

• Dollar General, Five Below, and Ollie’s Bargain Outlet raised their outlooks following standout Q2 performances, citing ongoing bargain-hunting behaviors.
• Ross Stores, Burlington, and TJX are also confident in their ability to gain share as economic uncertainty heightens off-price’s appeal.

By the numbers: More middle- and high-income shoppers are turning to retailers like Dollar General and Ollie’s to save money, helping drive sales for higher-margin categories like home goods and apparel. At the same time, low-income customers are sticking with retailers that can offer them the best value.

• Shoppers of all income brackets spent more with Dollar General in Q2, CEO Todd Vasos said, highlighting the strength of its value proposition and efforts to refresh stores and make them more inviting. Same-store sales increased 2.8% YoY, with customer traffic up 1.5% and average ticket size rising 1.2%.
• Off-pricers Ollie’s and Burlington also saw strong gains. Ollie’s same-store sales rose 5.9% YoY, which the retailer credited to its selection of great deals as well as its highly loyal—and growing—customer base. Burlington’s comparable sales increased by 5%, helped by efforts to elevate its product assortment and continued strength from low-income customers.
• But Five Below delivered the biggest sales bump by far, reporting a 23.7% increase in net sales and a 12.4% jump in same-store sales—both considerably ahead of expectations. The chain’s “extreme value,” simplified pricing, and improved in-stock levels resonated strongly in the quarter, with total traffic rising 18.3% YoY, per Placer.ai.

Competitive advantages: The uncertain environment is benefiting dollar stores and discounters in other ways. A spate of bankruptcies and store closures has freed up retail space that Ollie’s, Ross Stores, Burlington, Dollar General, and others are snapping up, giving those retailers opportunity to grow market share.

Crucially, these retailers are also more insulated from the impact of tariffs than their peers. As TJX and its peers took pains to emphasize, the off-price model is—in theory—less exposed to tariffs because much of their inventory is already imported or purchased from third parties that bear the duties. Dollar General, too, is confident about its ability to mitigate most tariff effects, since most of what it sells are locally sourced consumables.

However, that doesn’t mean there aren’t risks.

• Burlington noted that the period of high tariffs on Chinese imports interrupted inventory levels across the retail sector, weighing on its home goods sales. While those duties have eased, any future increase could once again disrupt merchandising plans.
• Tariff-related price hikes could also dampen discretionary spending, particularly among low-income consumers.

Our take: Value is top-of-mind for today’s consumer, regardless of income level. That’s good news for discounters and dollar stores, which are ideally placed to benefit from consumers’ financial anxieties. However, risks such as renewed tariffs or dips in consumer confidence mean retailers need to carefully manage their assortments and pricing.