By Jennifer Williams

Late last year, Academy Sports & Outdoors executives started noticing something unusual. The chain, which tends to draw bargain-hunters looking for everything from bicycles to outdoor grills, was seeing more and more higher-income shoppers.

"When I saw it, I went back to our customer insights team and said, 'I want you to double-check all this data for me,'" said Academy Finance Chief Carl Ford.

After inflation soared a few years back, Ford began expecting higher-income consumers, which Academy defines as households earning over $100,000. That didn't happen until around last fall, and it accelerated into early this year.

Academy is among those retailers that have seen their core value shopper pull back. The hope has been to make up some of that lost spending from more upscale households that might be better insulated from budgetary pressures -- a group that companies are investing to attract. And it is starting to work.

Those better-off shoppers "are coming because of financial stress," Ford said.

Consumer sentiment has fallen to near-historic lows following an avalanche of tariff changes from President Trump and rolling fears of recession. Against that backdrop, Ford expects higher-income households will continue to frequent Academy stores. "I would envision there to be continued financial stress in 2025 on the American consumer," he said.

Retailers' focus on well-heeled shoppers comes as executives closely gauge how consumer anxiety about the economy and inflation are playing out in their spending. Higher-income households have been spending at a stronger pace in recent months than middle- and lower-income consumers, according to a review of credit- and debit-card spending at the Bank of America Institute.

But as the economic unknowns continue, how and where the more comfortable consumer spends could change, said David Tinsley, senior economist for the Bank of America Institute. Lower-income shoppers traded down first, he said, but those pressures are rippling up the income brackets.

Value retailers are seeing the shift.

Reeling In the Higher-Income Shopper

At Dollar Tree, its lower- and middle-income shoppers are still frequenting the discount-retail chain's store aisles for party favors and holiday decorations, executives said at the end of March. But higher-income consumers are increasingly shopping the range of goods at the chain, which has in recent years boosted some prices above $1. Stronger demand from higher-income consumers helped to offset belt-tightening from other shoppers for the quarter ended Feb. 1. Same-store sales in the three-month period grew 2% driven by a 1.3% lift in average purchase ticket and a 0.7% increase in traffic. Nonetheless, the chain's net loss widened to around $3.7 billion from $1.71 billion a year earlier.

Dollar General has seen an acceleration in upper-end consumers trading down to its lower-priced items. The chain recently closed around 100 of its stores, but has plans to open 590 new ones. Sales rose 4.5% in the quarter ended in late January, while net profit sank 52% to $191 million, hit by costs related to store closures. On its earnings call, CEO Todd Vasos said, "As we enter 2025, we are not anticipating improvement in the macro environment, particularly for our core customer."

At Academy, higher-income consumer traffic increased by mid-single digits in December compared with a year earlier, a trend that continued into January, driving sales growth in the high-single digits in the two months, executives said in March -- this despite a 3% drop in same-store sales. To keep these shoppers and bring in new ones, the chain is working on its product mix.

Academy divides its goods into three price-related categories: good, better and best. Years ago, as much as 85% of its merchandise was in the lower-priced "good" tier, executives said at a conference this month. Then Academy invested nearly $1.2 billion to add items to its product line-up, mostly in the top two categories. The breakdown now: Around 60% of its products are good, 30% better and 10% best.

The retailer isn't aiming to hit a certain target, Ford said, but it is leaning toward the higher-priced goods. This month, Academy added Nike's Jordan brand footwear, clothing and accessories online and in 145 Academy stores for the first time. The chain hasn't disclosed prices for its Jordan offerings.

"It's a click above the normal Nike product that we already carry," Ford said of the Jordan line. "We think it'll resonate with a customer that tends to be at that 'best' level shopping pattern, and it gives them another reason to check out Academy."

The value chain sells certain items such as Nike T-shirts and shorts below the manufacturer's suggested retail price. Jordan wares will be an exception, according to Ford. "That's not one of the ones where we're looking to have pricing below MSRP."

Midtier Retailers Also Hope to Lure More Affluent Shoppers

It isn't just value chains that are hoping for more higher-income shoppers in the current environment. Vera Bradley, which usually draws customers from across a range of income levels with bags that cost from $5 to around $300, has seen customers with household income under $75,000 pull back even on lower-priced outlet items while higher-income segments are buying more often and spending more.

It is working to appeal to higher-income consumers through marketing and by narrowing its product assortment and redesigning products, said Michael Schwindle, the company's finance chief.

The brand best known for its quilted bags and backpacks aims to appeal to all shoppers, he added, but lower-income households squeezed by higher prices for groceries and other necessities are doing less discretionary spending.

"The impact is not nearly as significant as you move up the income strata," Schwindle said. "So we're trying to change the center of gravity of our consumer from where it has been to a little bit younger, a little bit more affluent."

Write to Jennifer Williams at jennifer.williams@wsj.com

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April 18, 2025 06:00 ET (10:00 GMT)

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