Consumer behavior choppy heading into the holiday shopping season

Retail traffic has remained unpredictable, mirroring economic uncertainty and consumer price sensitivity. Consumer behaviors continue to shift, and a bifurcation widens across income demographics, according to data from Placer.ai.

The report indicates weaker retail traffic in the last two weeks of August, through September, turning slightly positive in early October. The report also shows that consumers have shown up around 2025 holidays, lifting sales around Easter and back-to-school. Retail traffic and spending also increased during the summer months ahead of the proposed tariffs.

Placer.ai describes the retail landscapes as somewhat choppy during the first 10 months of the year, as consumers have grappled with macroeconomic uncertainty and a growing insistence on deep discounts among retailers. The report also highlights a two-tier economy that continues to emerge.

“Affluent consumers appear confident, largely driven by the wealth effect,” the report states. “With strong financial markets, a healthy housing market, and the positive impact of recent interest rate cuts, this demographic has seen its net worth grow and continues to spend on discretionary goods and services.”

Analysts with Placer.ai said their data points to strong performance categories catering to higher-income shoppers such as luxury department stores, specialty and fresh-format grocers, and fine dining restaurants. Their data indicates upscale restaurants and specialty fresh format grocery stores saw visits increase 2.9% and 5.8%, respectively, compared to a year ago. Luxury grocery visits were flat in the third quarter following 3.8% and 1.8% gains in the second and first quarters, respectively.

They contrast that with lower- to middle-income households who face mounting cost-of-living pressures that reduce discretionary spending.

“We’ve seen this manifest in increased traffic at discounters, warehouse clubs, dollar stores, and off-price apparel chains as households look to stretch their budgets,” the report states.

Placer.ai found that consumers are being strategic, resulting in more foot traffic during sales events, while avoiding stores during non-promotional periods. The report found that off-price retailers were the big winners in the third quarter, with 6.6% more store traffic than a year ago. That outpaced the 2.8% growth in warehouse clubs and 2.6% traffic growth in the value grocery segment. Discount and dollar store traffic increased 3.7% in the year-over-year quarter.

“Retailers are caught in a promotional arms race, pushing sales earlier than ever in a fierce attempt to attract these value-seeking shoppers and, more importantly, lock in a share of their limited holiday budgets before they are spent elsewhere,” the report noted.