EXCLUSIVE: Can Walmart And Dollar Tree Ride The 'Trade Down' Wave As War-Driven Price Shock Hits Americans?

When an oil shock hits, most retailers brace for impact. John Mercer, Head of Global Research at Coresight Research, thinks a handful are quietly positioned to profit from it. “Value-focused retail — Walmart, dollar stores, warehouse clubs, off-price — are relatively better positioned to serve price-sensitive consumers,” Mercer told Benzinga. “Higher gasoline prices and global uncertainty would serve as a tailwind to these structural gainers in retail.” The data backs him up. Dollar Tree‘s (NASDAQ:DLTR) fastest-growing customer in 2025 was the six-figure earner. In Q1, higher-income households accounted for 50% of net new customer growth; by Q2, two-thirds; by Q3, CEO Mike Creedon said roughly 60% of 3 million net new households earned over $100,000. As an Iran war-driven oil shock ripples through the U.S. economy, that shift is about to accelerate. Americans Are Already Feeling It After the Feb. 28 U.S.-Israeli strikes on Iran, disruption in the Strait of Hormuz sent oil prices above $100. Fuel prices surged quickly, with gasoline up 27% to $3.79 and diesel rising 34% past $5 a gallon, signaling wider inflation pressures. “2026 was already expected to be a year of still-elevated inflation, of about 2.8%, and it is likely to mark the sixth consecutive year of CPI averaging above 2% on an annual basis. The energy shock will only inject further upward pressure, while also adding uncertainty around rate cuts,” Mercer said. According to a recent survey by online shopping rewards platform Smarty, 59% of Americans feel that prices are rising faster than their income. U.S. households are feeling the sharpest price hikes in groceries (72%) and transportation/gas (33%). “Gasoline inflation impacts across the economy and through the supply chain — it drives costs higher across distribution, from getting products to an onshore DC to the last mile,” Mercer added. The Walmart Playbook During the 2022 Ukraine energy shock, former Walmart (NYSE:WMT) CEO Doug McMillon said rising food and fuel costs first pushed lower-income shoppers to cut discretionary spending, with the trade-down trend later spreading to higher-income groups. Walmart turned recent disruptions into a lasting advantage: in Q4 FY2026, it beat expectations with $190.7 billion in revenue, 4.6% U.S. comparable sales growth, and 24% global eCommerce growth. Meanwhile, during its Q4 earnings call earlier this month, Dollar Tree’s CEO Creedon noted that the company was seeing an “accelerated” trade down in higher-income households. Meanwhile, TJX Companies (NYSE:TJX) and Ross Stores (NASDAQ:ROST) operate on a different but complementary model; their treasure-hunt experience tends to draw more foot traffic in cost-conscious environments. Warehouse clubs, mainly Costco (NASDAQ:COST), have consistently demonstrated cross-income appeal through unit economics value and membership lock-in. But analysts have questioned whether Dollar Tree and other similar stores retain higher-income shoppers the way Walmart has. Mercer said it’s still “too early” to assess, as companies have offered limited commentary with earnings season nearing its end. The Other Side Of the Trade The same shock that sends affluent shoppers toward discount retail squeezes lower-income core customers hardest. “During times of consumer constraint, we tend to see value-positioned retailers such as Walmart and dollar stores feel a negative impact from lower-income shoppers spending more cautiously,” Mercer said. “The impact for retail is not simply that consumers cut purchases; it is also that they modify their behavior, tending to make more deliberate shopping trips to conserve fuel.” Though Mercer anticipates higher-income shoppers to drive 2026 retail sales growth, he also flags a risk specific to this cohort. “A risk for spending among higher-income consumers is that stock-market declines will dent sentiment and propensity to spend.” PRICE ACTION: Over the past year, shares of Dollar Tree, Walmart, and TJX Companies surged 55.25%, 37.99%, and 30.85%, respectively, as per Benzinga Pro. Benzinga's Edge Rankings place Walmart in the 89th percentile for quality and the 83rd percentile for growth, reflecting its strong performance in both areas. Benzinga’s screener allows you to compare Walmart’s performance with its peers. Image via Shutterstock