More investors are watching the shares of discount retailers like Dollar General Corp and Dollar Tree Inc, which perform better during economic downturns, in the hopes of gauging changes in consumer behavior, though higher tariffs may erode the companies' ability to act as economic bellwethers.
Fund managers and analysts say that they are looking for signs of a so-called "trade-down trade", in which consumers forgo shopping at higher-end department stores or supermarkets in favor of the more limited selection but lower prices at deep discounters. Between December 2008 and December 2011, for instance, shares of Dollar Tree soared nearly 200% as consumers pinched pennies during the Great Recession, while the benchmark S&P 500 gained just 39% over the same time.
For the year to date, shares of Dollar Tree are up 7.3% as it integrates its purchase of former competitor Family Dollar, while shares of Dollar General are up 28.4%. Both companies are scheduled to report earnings Aug. 29.
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