MW Gen Z demands bigger bargains - driving gains for discounters like Walmart and Ross
By Bill Peters
'We're outperforming virtually every other retailer that we can track' in drawing shoppers ages 18 to 24, Ross Stores said
Walmart reported quarterly earnings last week.
As gas and seemingly everything else get more expensive, younger consumers are increasingly driving growth for the nation's biggest discount retail chains - and even influencing what appears on store shelves.
In earnings reports over the past week, chains like Walmart $(WMT)$ and Ross Stores $(ROST)$ highlighted the gains they were making, and in some cases trying to make, with Gen Z and other younger consumers who might be less established in their careers and on shakier financial footing than older generations - and thus likelier to seek cheaper options.
That's as results from Walmart and Target (TGT) raised deeper worries about consumer demand, with the Iran war having disrupted supply chains and pushing costs higher for gasoline and other materials - like polyester for clothing, the steel used for razor blades and the plastic that goes into packaging.
Latriece Watkins, president and CEO of Walmart's membership chain Sam's Club, said during the retail giant's earnings call last week that half of the membership growth at Sam's Club came from millennials and Gen Z-ers. She also said the chain's younger consumers were helping to create and select the items sold under its Member's Mark store brand.
Watkins said Sam's Club had removed dozens of ingredients, like artificial colors and high-fructose corn syrup, from Member's Mark products in response to younger-member demand. And in the case of at least one clothing item - a pique sandwash dress - Sam's Club members had even influenced the design.
"They've chosen the colors, they've chosen the style of the dress, and they're buying it with a lot of frequency," she noted.
Elsewhere, Ross Stores CEO James Conroy also said last week that more young consumers were dropping by the company's stores. "We're just outperforming virtually every other retailer that we can track" with shoppers age 18 to 24, Conroy said, describing such customers as "very difficult to attract."
"That younger customer has really gravitated towards us, which has been part of the strategy and it's really starting to take root," he said.
Ernie Herrman, the CEO of TJ Maxx and Marshalls parent TJX $(TJX)$, offered similar remarks last week. He said the company's first-time customers were from "a disproportionately younger age group relative to the general population."
Meanwhile, e.l.f. Beauty (ELF) said it was trying to find ways to get younger consumers back, even as it attracks more Gen X-ers looking for deals. The low-priced cosmetics maker last week said it would cut prices on some items after signs of a slowdown in demand.
Data this month from Placer.ai, a retail-traffic analytics firm, also showed that dollar-store chain Dollar Tree $(DLTR)$ might be doing a better job than archrival Dollar General $(DG)$ in attracting younger shoppers and families with children, thanks to its bigger selection of cheap party supplies and home goods.
Dollar Tree reports quarterly results on Thursday. More details on the state of Gen Z's bargain hunt could also emerge this week with earnings from discounters Burlington Stores $(BURL)$ and Costco Wholesale $(COST)$, also on Thursday.
R.J. Hottovy, head of analytical research at Placer.ai, said that historically, the average age of a shopper at warehouse clubs - like Costco, Sam's Club or BJ's Wholesale Club $(BJ)$ - was typically in the mid- to late 30s. But he said the firm's own data had shown that age trending younger, with average household incomes at those stores also coming down as a result.
"They're starting to form families, they've moved into the suburbs, and both warehouse clubs and off-price retail is generally a way to stretch that household budget," Hottovy said of younger consumers.
Some analysts say the so-called K-shaped economy - where fortunes for wealthier consumers go up, while declining for everyone else - has gotten more pronounced this year. In the process, major discount retailers - be it Walmart, Costco or Amazon.com (AMZN) - have managed to draw higher-income shoppers and lower-income ones alike.
"Younger generations' gasoline spending is relatively high compared to their discretionary spending, so there is the potential they will need to pull back most aggressively in the face of higher gasoline prices," BofA analysts said in a report in March.
The analysts added that Gen Z appeared "most exposed to rising gas prices compared to other generations." Gasoline this year has taken up around 7% of Gen Z's total card spending per household, according to BofA data, compared with around 4% for Boomers.
Research from Capital One in March also showed thrift stores becoming more popular with younger shoppers. According data from the bank, 83% of Gen Z consumers "either purchased or are interested in secondhand apparel." That was 10.7% above the average among age groups tracked.
A report from Circana in October found Gen Z-ers and millennials had shifted more of their spending toward food and beverages sold at retailers compared to Gen X-ers and baby boomers, as younger consumers work harder to cover the basics.
Still, that report projected that Gen Z-ers and millennials would account for more than 60% of retail sales growth in the next five years.
Store chains, for their part, would likely be more than happy to draw customers when they're younger and their shopping habits are less solidified - even if their financial footing isn't as firm as that of older shoppers.
Retailers, Hottovy said, would "take that trade any day of the week."
-Bill Peters
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
May 26, 2026 17:35 ET (21:35 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments