Value-oriented retailers stand to benefit as costs rise

The landscape: The Trump administration’s aggressive trade policies are pushing consumer costs higher: The full slate of 2025 tariffs is expected to raise overall price levels by 2.9% in the short term, per Yale University’s Budget Lab.

Consumers have taken note: Consumer sentiment fell to its second-lowest reading on record, while year-ahead inflation expectations surged from 5.0% in March to 6.7% in April—the highest reading since 1981 and the fourth straight month of unusually large increases (0.5 percentage points or more), per the University of Michigan. The spike spans all political affiliations.

• Meanwhile, the share of consumers expecting unemployment to rise in the year ahead has increased for the fifth month in a row—more than doubling since November 2024 and reaching its highest point since 2009.
• “Consumers report multiple warning signs that raise the risk of recession: Expectations for business conditions, personal finances, incomes, inflation, and labor markets all continued to deteriorate this month,” wrote Joanne Hsu, director of the University of Michigan’s Surveys of Consumers, who recently appeared on our “Reimagining Retail” podcast.

The fallout: The combination of rising prices, weakening sentiment, and stock market volatility is making consumers more price-sensitive—and driving shifts in shopping behavior. Shoppers are increasingly trading down to private-label or lower-priced brands, cutting discretionary purchases, delaying big-ticket items, and consolidating trips to stretch their budgets.

The shifts: These behavioral changes began surfacing even before the White House’s April 2 “Liberation Day” tariff announcement. In late March, consumers appeared to be pulling forward demand in anticipation of price hikes—especially at warehouse clubs, where value, strong private-label offerings, and the ability to stock up are major draws. According to Placer.ai foot traffic data, warehouse clubs recorded their strongest year-over-year visitation gains the week of March 24.

• Warehouse clubs are well-positioned to benefit from the current environment. Sam’s Club, for instance, is seeing record membership levels and plans to accelerate growth—opening about 15 new stores annually and remodeling all of its locations. The Walmart-owned chain aims to double its membership base over the next eight to 10 years. Costco and BJ’s Wholesale Club are expanding as well.
• Off-price retailers such as TJMaxx and Nordstrom Rack are also poised to win over value-driven shoppers. Their flexible buying models and ability to source merchandise locally help insulate them from rising import costs—while appealing to consumers across income levels and regions.
• Discount grocers, including fast-growing Aldi, are similarly well-positioned to attract cost-conscious shoppers prioritizing affordability without compromising on quality.

Our take: While few, if any, retailers truly “win” in a challenging economic environment, those that lean into value—through price, private-label strength, or operational agility—will have a clear edge over the competition.

Go further: Read our report on the Impact of Tariffs on US Businesses.