"Something unusual is happening at Dollar Tree: The discount retailer said this week that of the 3 million new households that shopped its stores in the third quarter, approximately 60% of those new customers came from households earning more than $100,000 a year. The trend underscores a deepening split in the American economy. While cumulative inflation has pushed prices up roughly 25% since 2020, wage growth has not kept pace for most households, leaving consumers across the income spectrum hunting for deals."
"The shift reflects what analysts describe as a "K-shaped" economy, where wealthy Americans-buoyed by stock market gains and appreciating assets-continue spending freely while everyone else tightens their belts. According to an RBC Economics analysis, the top 10% to 20% of income earners are driving consumption growth, while the bottom 80% have minimal financial reserves and are increasingly stretched thin. Kroger, the nation's largest supermarket chain, painted a similar picture in its earnings report Thursday."
Dollar Tree gained about 3 million new households in the third quarter, with roughly 60% coming from households earning more than $100,000 annually. The chain reported that 85% of quarter sales were priced at $2 or less and same-store sales rose 4.2%. Dollar General and Five Below reported similar demand from higher-income shoppers and improved profits. Cumulative inflation has pushed prices about 25% since 2020 while wage growth lagged, prompting consumers across incomes to hunt deals. Analysts characterize the pattern as a K-shaped economy, with the top 10–20% driving consumption while the bottom 80% remain stretched.
Read at Fortune
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