Low-income Americans’ financial condition has gotten worse over the last year and more shoppers are going without basic necessities.
That’s the worrying message coming from Dollar General, which sells inexpensive items and is thus considered a bellwether for low and middle-income shoppers’ health. Dollar General’s “core customers” earn under $40,000 a year, and the chain has more than 20,000 stores, primarily in rural areas.
“Our customers continue to report that their financial situation has worsened over the last year as they have been negatively impacted by ongoing inflation,” Dollar General CEO Todd Vasos said on an earnings call Thursday. “Many of our customers report they only have enough money for basic essentials, with some noting that they have had to sacrifice even on the necessities.”
Inflation cooled in February for the first time in five months, but housing, health care and other costs remain high and are chipping away at customers’ budgets.
Dollar General said its sales at stores open for at least one year increased just 1.2% last quarter as fewer of its primary customers visited to shop because of “ongoing financial pressures.”
At the same time, Dollar General is seeing middle-income consumers trade down into shopping at stores in recent weeks. That’s a sign of the financial pressure on Americans making a little more money.
Dollar General also said that President Donald Trump’s tariffs on imported goods may also hurt consumer demand and lead the company to raise prices— straining its customers even further.
The company said it was “well positioned” to mitigate the impact of tariffs, as it was in 2018 and 2019, though it did raise prices then to offset tariffs.
Consumer slowdown
Many companies are noting a consumer slowdown across income levels because of inflation, tariffs and a wobbly stock market. In an interview with Fox News on Sunday, Trump declined to rule out the possibility of a recession, contributing to a stock market selloff this week.
Delta Air Lines slashed its profit outlook Monday, warning that deteriorating corporate and consumer confidence is hurting travel demand.
But lower-income customers, and the retailers that cater to them, are most vulnerable to inflation and economic changes.
Between September 2023 and September 2024, high-income households increased spending by 12%, while working-class and middle-class households decreased their spending during the same period, according to Moody’s Analytics.
Kohl’s (KSS) said Tuesday that sales could drop as much as 6% this year, sending its stock down 25%. Economic uncertainty has taken the biggest toll on lower-income consumers, Kohl’s CEO Ashley Buchanan said Tuesday on a call with analysts.
Consumers making less than $50,000 a year are “pretty constrained,” she said, and “it’s also pretty, pretty challenging” for customers making less than $100,000 annually.
CNN
