The close of 2024 had many discount retailers preparing for what were expected to be major shifts in our economy, the first half of 2025 has shown that those preparations were not in vain. Trade policy and tariffs in many ways were worse than anticipated, causing some discount retailers to make big changes in what they are sourcing and promoting to consumers.
Consumers likewise have shifted their buying habits and expectations, with more shoppers willing to hunt for deals and find hidden gems.
And while there have been concerns for some discount retailers as they navigate the new economic environment, there have also been standouts that make for plenty of excitement in the industry.
Tariffs Worse Than Expected
Discount retailers knew that with the new Presidential administration, changes were coming that would impact both how they sourced and sold goods. What was less expected was just how harsh and immediate those changes would be, with the announcement of tariffs much higher than anyone anticipated.
TJX in particular saw the impact of these policy changes reflected in its stock prices. Despite a solid sales quarter in Q1 2025, beating out its own expectations, concerns about tariffs were noted by investors. In response, TJX expressed confidence in its ability to mitigate the impact of trade policy, in part by shifting focus from home goods and apparel to consumable products that are produced in the United States.
This shift is happening across the board in the discount retail market, as every retailer adjusts to the new landscape for global trade. Consumables were repeatedly reported as the top sales category in Q1, showing that not just retailers, but consumers as well, are adapting to current economic conditions. Retailers who already have a strong presence in consumables, especially those purchased opportunistically and sold at higher margins, are particularly positioned for success.
Focusing on Opportunities
Alongside a renewed focus on consumables, many retailers in the discount market also showed a recommitment to opportunistic purchasing and providing customers with a “treasure hunt” experience.
Grocery Outlet highlighted this during their Q1 2025 earnings call, citing opportunistic sourcing as one of its strengths and a top focus for the rest of the year. In Q2, they also reported they have increased the penetration of consumables in their stores, as opposed to traditionally purchased, private label, or replenishable items. As Grocery Outlet continues to grow and scale, it remains committed to closeout and opportunistic purchasing, both to maintain customer interest with the thrill of the hunt for high-value items at a low cost, and to improve its margins and differentiation in the grocery landscape.
Ollie’s also cited opportunistic buying and providing tremendous value to its customers as its focus at the start of the year. Ollie’s noted the reduction in competition due to the closure of Bargain Hunt and Big Lots’ significant reduction in store count as a boon for its bottom line, offering more pipeline for closeout inventory.
Big Lots = Big Opportunity
While the Big Lots bankruptcy created some concerning headlines at the end of last year, the retailer is returning this year, committed to rebuilding its brand and its demand for products.
Having learned lessons from their shift to less opportunistic retail, Big Lots is returning to what made it so attractive to consumers years ago — opportunistic consumables at prices that provide consumers with a “wow” factor they can’t find anywhere else.
Big Lots’ buyer teams are currently working to rebuild relationships and focusing on opportunistic consumables, with no replenishment. Targets include middle-income shoppers who are not just looking for the lowest price, but the greatest value.
Another retailer entering the market for opportunistic buying is Citi Trends. With new company and merchandising leadership in place, Citi Trends is beginning to build out its program with a focus on longer shelf-life products that can help get it off the ground in this category. As it continues to grow in the market, suppliers will want to keep their eyes on Citi Trends.
Finally, the market has seen an uptick in demand from Dollar Tree. After its divestment of Family Dollar, Dollar Tree has renewed its commitment to driving value for customers via opportunistic purchasing.
Despite the larger-than-expected policy changes, discount retailers' strong ability to adapt and shift strategies is unmatched in the larger retail landscape. At Spoiler Alert, we are committed to supporting this segment of the market, as well as consumers who seek value wherever possible.
Would you like to know more about the discount retail market and how you can leverage it for success in your CPG? Reach out to our team today!
