Something unusual is happening at Dollar Tree: The discount retailer said this week that of the 3 million new households that shopped its stores in the third quarter, approximately 60% of those new customers came from households earning more than $100,000 a year.​​

The trend underscores a deepening split in the American economy. While cumulative inflation has pushed prices up roughly 25% since 2020, wage growth has not kept pace for most households, leaving consumers across the income spectrum hunting for deals.​

“Higher-income households are trading into Dollar Tree; lower-income households are depending on us more than ever,” Dollar Tree CEO Michael Creedon Jr. told analysts on Wednesday. The Virginia-based chain, where 85% of sales during the quarter were priced at $2 or less, reported same-store sales growth of 4.2%.​

Dollar General, the nation’s largest dollar-store chain with nearly 21,000 locations, reported similar dynamics in its own earnings report this week. CEO Todd Vasos noted “disproportionate growth coming from higher-income households” in the third quarter, as same-store sales rose 2.5% on a 2.5% increase in customer traffic. The company’s net profit climbed 44% to $282.7 million. Discount retail chain Five Below also raised its profit outlook for the rest of the year, lifted by demand for budget-friendly goods and a weaker labor market.

The shift reflects what analysts describe as a “K-shaped” economy, where wealthy Americans—buoyed by stock market gains and appreciating assets—continue spending freely while everyone else tightens their belts. According to an RBC Economics analysis, the top 10% to 20% of income earners are driving consumption growth, while the bottom 80% have minimal financial reserves and are increasingly stretched thin.​

Kroger, the nation’s largest supermarket chain, painted a similar picture in its earnings report Thursday. CEO Ron Sargent told analysts the company is “seeing a split across income groups,” with spending from higher-income households remaining “strong” while “middle-income customers are feeling increased pressure, similar to what we’ve seen from lower-income households over the past several quarters.”​

Those consumers, Sargent added, are “making smaller, more frequent trips to manage budgets, and they are cutting back on discretionary purchases.”​

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