The US consumer holds up, but is becoming far more selective about where to spend

July retail sales fell 0.6% month-on-month, yet results from the major retailers show that the American consumer has not stopped spending. They are becoming more disciplined: rewarding value, protecting essentials and more readily deferring costly discretionary purchases.

The July macro reading, taken in isolation, would appear to suggest a consumer in rapid deceleration. Yet the micro picture is more nuanced. The four most significant quarterly reports of the week depict a consumer who continues to spend, provided the relationship between price, utility and necessity remains compelling.

Target: when value works, traffic returns

Target is the most constructive signal in the group. Comparable sales grew 3,8%, supported by a 3.6% increase in traffic and digital comparable sales growth of 8.7%. Strength was broad-based: all six core categories posted growth, with Food & Beverage and Beauty in the high single digits and Fun 101 in double digits.

The strategic message is clear: Target has cut prices on more than 10,000 items over the past year and is leveraging value, newness and convenience to recapture traffic. This is not the portrait of a consumer in retreat. It is the portrait of a consumer who demands a stronger reason to spend.

Walmart: resilience yes, but the pace is slowing

Walmart U.S. reported comparable sales of 2,6%, with a result below market expectations. U.S. eCommerce grew 24% and the company continued to gain share across income cohorts. However, the reading should not be overstated: the pace of comparable growth slowed relative to the prior quarter.

Walmart executed more than 11,000 rollbacks in the quarter and explicitly directed a portion of tariff refund benefits towards price defence. This is a significant signal: value is no longer merely a competitive advantage — it has become a prerequisite for protecting volumes.

Home Depot and Lowe's: big-ticket remains the weak point

Home Depot recorded global comparable sales growth of 1,7% and 1.3% in the United States. The comparable ticket rose 2.8%, while comparable transactions declined 1.0%. Management emphasised that demand remains broad-based but concentrated on smaller projects.

Lowe's is the most fragile signal: comparable sales barely +0,2%, supported by Pro, home services and online, while the company continues to flag persistent DIY macro pressures. More significantly, annual guidance was revised lower: comparable sales are now expected to be flat, against the prior range of flat to +2%.

The distinction is now clear-cut. Maintenance, necessity and small projects continue. Major renovations and financed discretionary spending remain far more exposed to elevated rates, weak housing turnover and household caution.

The consumer is not retreating: rotating towards value

The Census Bureau recorded July retail and food services sales down 0.6% m/m, yet still 5.0% above the prior year. The quarterly results allow for a more refined reading of that figure: demand is not uniform, but neither is it in broad-based freefall.

This is why classifying the consumer simply as "strong" or "weak" is no longer particularly useful. The decisive variable is the composition of spending. Walmart and Target show that the consumer responds to price and value. Home Depot and Lowe's show that when a purchase requires capital, credit or a greater commitment, caution rises rapidly.

Macro implications

The most consistent reading is orderly slowing / value rotation. The consumer continues to support the economy, but with increasing discipline. This makes growth more selective and retail earnings more dependent on companies' ability to manage price, mix, traffic and margins.