We recently presented our latest read on the U.S. consumer and retail to UBS clients. The presentation draws on Advan foot traffic and dwell time to assess a back-to-school season that proved strong, and then asks a harder question: is real discretionary spending growth shifting from income-driven to wealth-driven, and what does that mean for the brands built on the mass consumer?
The Signal
Back-to-school traffic accelerated at general merchants, with Target running +310bps and Walmart +170bps versus their fiscal Q2 trends (quarter to date through September 8). Wealth growth, stable employment, limited overlap between back-to-school and Prime Day, and less tariff disruption all supported physical retail. Momentum cooled into September as the extended back-to-school window and higher gas prices weighed on traffic.
Key Takeaways
- Target stormed August. Our August estimates show store comp sales of 7.5%, driven by traffic (+7.0%) and positive conversion, with average ticket down 0.7%.
- Value and sporting goods were more mixed. Dollar store traffic held a steady trend (Five Below -140bps and Dollar General -40bps versus fiscal Q2), while sporting goods ran highly promotional, which sets up easier comparisons in 2027.
- Off-price and apparel split on conversion. Marmaxx improved slightly (+15bps versus fiscal Q2) while Ross slipped (-46bps). Kohl's drove more traffic (+2.8% in August) but did not capture the sale, with store comps of -3.5%, while Old Navy did, with US store comps of +1.1%.
- The high end rotated. Spending shifted from European luxury into experiences: Louis Vuitton decelerated 400bps quarter to date versus Q2 and Gucci slowed 12 points, while Coach accelerated 16 points.
- The bigger question: a K-shaped consumer, limited job growth, and little real wage growth in 2026 point to wealth, not income, driving real spending growth, while our adjusted view of Census projections shows roughly 0.1% net population growth through 2040 and declining under-30 cohorts. That matters for Walmart and Target, Lowe's and Home Depot, limited service restaurants, and large national brand CPG.
Methodology note: This analysis uses Advan foot traffic data derived from a panel of mobile devices, normalized against census and demographic benchmarks, and presented on a per-store adjusted basis. Foot traffic is a directional indicator and should be evaluated alongside reported financials and other fundamental data.
