Bernstein Data Shows K-Shaped Consumer: Low-Income Shoppers Feel the Squeeze at US Retailers

Bernstein Foot Traffic Analysis Points to a K-Shaped Consumer

A new analysis from Bernstein using foot traffic data highlights a growing divide in the US consumer base: low-income households are increasingly pinched by inflation and turning to cheaper stores with smaller, more frequent purchases, while middle- and high-income shoppers remain resilient but value-conscious. The report, based on ADVAN research that tracks store visits by income cohort, paints a picture of a “K-shaped” consumer economy where the fortunes of the top and bottom ends are diverging.

For budget-focused retailers, the data shows that discount and dollar stores are seeing a rise in low-income traffic. Dollar General recorded a slight acceleration in visit growth from the first to the second quarter of 2026, while Dollar Tree’s growth slowed. Analysts Zhihan Ma and Jeremy Miles noted that the lowest-income shoppers are choosing to shop more often with smaller baskets to manage tight cash flow — a pattern that matches company commentary about mounting pressure on this segment.

Meanwhile, middle- and high-income consumers show no evidence of trading down to cheaper products based on physical store traffic. However, Bernstein cautions that this may be because these shoppers are buying more online, where foot traffic data cannot capture their behavior. Among broadline retailers and warehouse clubs, Walmart and Target saw a deceleration in visit growth from Q1 to Q2, while Costco’s growth remained solid. Across all three, low- to middle-income consumers drove the visit growth early in the year, with the highest-income cohort lagging — again, likely due to the online blind spot.

The takeaway from the report is that while inflation pressures, especially from gasoline, have begun to moderate, low-income consumers are likely to remain under stress. The analysts expect value-focused retailers to continue gaining market share, with Walmart and Costco poised to lead price investments once tariff-related relief flows through.

Where the Pressure Hits: Foot Traffic Reveals the Real Story at US Retailers

Low-Income Shoppers: Smaller Baskets, More Frequent Trips

The most concrete signal from the ADVAN data is the change in shopping rhythm among low-income households. Both Dollar General and Dollar Tree saw visit growth driven primarily by the lowest-income cohort, but the divergence between the two chains is telling. Dollar General’s slight acceleration suggests its store footprint and assortment may align better with the “manage cash flow by shopping more” behavior. Dollar Tree’s slowdown could reflect a stiffer competitive environment or a product mix less suited to ultra-frequent, tiny-basket trips.

This shift matters because it changes inventory and staffing needs. A retailer that sees more trips with smaller baskets faces higher transaction costs per dollar of revenue, and must ensure cash-management-related product sizes — like smaller packs and single-serve items — are well-stocked. The Bernstein team’s direct conversation with company management confirms this pattern is a deliberate response to cash constraints, not a temporary blip.

Middle and High Earners: The Online Blind Spot

Bernstein’s inability to see trade-down activity among upper-income shoppers via foot traffic doesn’t mean they aren’t value-seeking; it means the action has likely moved online. If higher-income consumers are comparing prices on Amazon, buying direct from brands’ sites, or using pickup options that bypass in-store browsing, then physical traffic metrics will understate their price sensitivity. For retailers like Target, which competes both in stores and online, this blind spot could mask a real shift in basket composition or channel choice that still threatens margins.

Walmart, Target, Costco: Diverging Trajectories

The deceleration at Walmart and Target from Q1 to Q2 is notable because it happened despite the low-income stress that typically helps Walmart. One explanation is that the initial post-holiday surge faded, and the highest-income shoppers — who are less visible in foot traffic — pulled back. Costco’s steady growth, by contrast, underscores the membership model’s resilience: its core customer skews higher-income and may be sticking with the club format because they perceive it as good value, even if they are also shopping online elsewhere.

For Target, the slowdown could be a warning. The retailer has worked hard to rebuild its traffic after earlier missteps, but if its middle-income customer is moving more spending online — where Target faces fierce price competition — then physical visits may not translate into the same sales growth. Bernstein’s overall conclusion is that value-driven retailers are well-positioned, and the analysts explicitly called out Walmart and Costco as likely leaders in price investment after tariff adjustments, which would further pressure mid-tier players.

What the K-Shaped Pattern Means for Retail Strategy

• Walmart and Costco are projected to use tariff-related price relief to cement market-share gains. If the Bernstein call is right, these two will lead price cuts, making it harder for Target and regional grocers to compete on the value perception that now drives even higher-income traffic.
• Dollar General’s acceleration vs. Dollar Tree’s slowdown suggests a divergence within the dollar channel. Retail executives and investors should watch whether Dollar General’s smaller, more frequent basket pattern is sustainable or signals a structural shift toward “paycheck-to-paycheck” shopping that needs different supply chain models.
• Physical traffic data alone is insufficient to gauge middle-income trade-down. Any retailer whose strategy relies on foot traffic metrics must supplement them with online share-of-wallet analysis, especially as higher-income households shift purchase research and buying online.
• Low-income cash-flow shopping is sticky. Retailers serving this demographic should optimize for high-frequency, low-basket-size trips — adjustments to pack sizes, checkout speed, and weekly promotions tied to common payday cycles could unlock revenue from the very stress that otherwise depresses spending.