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Santa isn’t the only one feeling the holiday spirit. Shoppers are too, as some consumers are feeling better about the economy, according to executive commentary from major retailers. However, it’s a mixed bag, as there are still consumers holding back on spending.
“While overall consumer sentiment remains low, expectations are improving, which positions us well for the holidays and into next year,” Kroger CEO Rodney McMullen told investors on the grocery chain’s Q3 earnings call last week.
McMullen said higher- and middle-income households are feeling “more confident” with inflation stabilizing, although “budget-conscious” shoppers are still holding back on spending, as they feel the lingering sting of cost increases and high interest rates. Middle-income (or “mainstream”) shoppers “certainly…connected with us better in the third quarter than the second quarter,” he added.
Q3 shopping patterns at Dollar General showed that many are still “trying to make ends meet,” CEO Todd Vasos told investors last week. This is evidenced by the solid performance of Dollar General’s private brands and its $1 item aisle—the so-called “Value Valley” outperformed all other sections of the store by 600 basis points, he said.
Dollar General CFO Kelly Dilts said the company’s performance expectations range from “a macro neutral environment” on the high end to softening on the low end.
Vasos also offered “some glimmers of hope.” He said the Dollar General customer is showing a touch more discretionary spending, though “she’s been very selective when she does and she’s buying it very close to need,” he said, noting in particular some discretionary spending around Halloween. Vasos said Dollar General is “optimistic on what that consumer will start to spend as we get a little closer” to Christmas.