Retail Giants Expected to Benefit as Shoppers Prioritize Essentials
Retail giants Walmart (WMT) and Costco (COST) are well-positioned to navigate the latest wave of tariffs, according to a report from UBS analysts. With tariffs affecting imports from multiple countries, retailers cannot easily avoid higher costs, but those with strong grocery offerings and large-scale operations may have an advantage.
UBS noted that consumers are unlikely to cut back on essential purchases such as groceries, making Walmart and Costco top contenders to maintain customer traffic while leveraging their size to negotiate better pricing with suppliers.
“These retailers will likely be able to widen their price gaps with competitors in categories hit by tariffs,” the analysts wrote. “The longer the tariffs persist, the more likely it is to drive further consolidation in retail, benefiting those with scale and strong positioning.”
Supermarkets and Auto Parts Retailers Expected to Hold Strong
Beyond Walmart and Costco, UBS expects supermarket chains like Kroger (KR), Albertsons (ACI), and Sprouts Farmers Market (SFM) to fare well, as consumers continue to prioritize essential food purchases.
The report also highlighted the resilience of auto parts retailers such as Autozone (AZO) and O’Reilly Automotive (ORLY). With tariffs likely to raise the price of new vehicles, consumers may opt to maintain their current cars longer, increasing demand for replacement parts and maintenance services.
Off-Price Retailers May Gain From Higher Prices Elsewhere
UBS also pointed to off-price retailers, including Burlington Stores (BURL) and TJX Cos. (TJX), the parent company of TJ Maxx and Marshalls, as potential winners. If tariffs limit merchandise flow for traditional retailers, discount chains could benefit by sourcing lower-cost inventory.
While tariffs pose challenges for many businesses, retailers that focus on essentials and value pricing appear best equipped to weather the storm.
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