Holiday Cheer for Walmart (WMT) as Shoppers Flock to Value Over Glitz

Walmart cashes in as consumers ditch luxury for practicality—proving once again that when wallets tighten, discount retailers become the real holiday winners.

The Value Migration

Shoppers bypass flashy brands for staple goods and everyday essentials. Walmart's strategy of prioritizing affordability over exclusivity pays dividends during economic uncertainty.

The Bottom Line Bump

Increased foot traffic and basket sizes drive revenue growth. The retail giant's focus on value positioning captures market share from premium competitors struggling with inflated inventories.

Wall Street's Ironic Cheer

Analysts celebrate the surge while quietly ignoring that consumer desperation fuels the rally—because nothing says 'healthy economy' like bargain-bin euphoria.

Elevate Your Investing Strategy:

• Take advantage of TipRanks Premium at 50% off! Unlock powerful investing tools, advanced data, and expert analyst insights to help you invest with confidence.

Steep Drop

Shares in Walmart were up nearly 1% today as a new report from PricewaterhouseCoopers showed that holiday spending by U.S. shoppers was set for its steepest drop since the pandemic.

PwC, which polled about 4,000 U.S. consumers between June and July, said shoppers on average plan to spend about $1,552 per person, down 5.3% from last year. The last comparable decline was in 2020, when average spend fell 7.6% to $1,187.

About 84% of consumers expect to curb spending over the next six months, especially on clothes, big-ticket items and dining out. More than half said price increases are likely to affect their holiday decisions.

The main issues giving shoppers a chill ahead of this winter include the risk of higher inflation and the impact of President Trump’s tariff trade policies on Christmas cheer.

This has made shoppers more cautious about discretionary purchases.

Value Winners

What this could mean is that retailers which are best known for value could be the winners during Thanksgiving and Christmas.

Target (TGT), Best Buy (BBY) and Home Depot (HD) have maintained their annual forecasts in recent weeks. Walmart and Abercrombie & Fitch (ANF) raised their outlook, while Mattel (MAT) cut its forecast.

“Consumers are approaching holiday purchases more deliberately, deciding what matters most, where to scale back and what feels worth the splurge,” PwC said.

Spending on gifts is expected to take the hardest hit, falling 11% to an average spending of $721 from $814 last year, according to the survey. Gen Z budgets are expected to shrink by 23%, compared to a 37% rise in 2024.

“The traffic for Gen Z in stores has been going up, because they want that experience, but they’re not necessarily transacting in-store,” said Kelly Pedersen, partner at PwC.

Walmart could therefore benefit across its revenue streams – see below:

However, PwC analysts cautioned that purchasing behavior could still shift as the holiday season and the pressure to spend ramps up.

A cut to interest rates, much touted for September, and an easing in fears over tariffs could also change the picture.

Is WMT a Good Stock to Buy Now?

On TipRanks, WMT has a Strong Buy consensus based on 29 Buy ratings. Its highest price target is $127. WMT stock’s consensus price target is $113.89, implying a 15.70% upside.