Goldman Maps Retailer Exposure To Working-Poor Consumers As Gas Soars

With the nationwide average gasoline price accelerating above the politically sensitive $4-per-gallon level, and the consumer backdrop for low-income households darkening, Goldman analysts published a note on Wednesday identifying which big-box retailers have the greatest exposure to working-poor households.

“Our economists expect spending headwinds from higher inflation to weigh on growth for the rest of the year,” Goldman Sachs Managing Director Kate McShane wrote in the note. She covered how Goldman analysts raised their Brent forecast for the fourth quarter of this year and the gloomy backdrop facing consumers.

She continued, “Moreover, higher headline inflation is set to erode household spending power, particularly among lower-income households that spend roughly four times as much on gasoline as a share of after-tax income compared to the top quintile.”

She explained in more detail:

We expect the bottom-income quintile to lag the aggregate US household with +4.2% DPI growth in 2026 (vs. +4.7% aggregate) as our economists continue to expect tepid job growth. Cuts to Medicaid and SNAP benefits, and now greater exposure to the increase in gasoline prices are cost headwinds to this income cohort. Our pre-savings DCF expectations for the bottom quintile remain unchanged at +0.8% for 2026, well below the +3.7% aggregate growth rate.

Higher energy prices do drive a headwind to our Consumer Discretionary Cash Flow model, and accordingly we estimate that a $10/barrel change in fuel prices equates to a ~18bps impact to consumer spending power, all else equal. The magnitude of the recent, rapid change in fuel prices may drive a ~88bps headwind for consumer discretionary spending power in FY26, if higher fuel prices hold (~$120/barrel). Taking this one step further, we use the breakdown of consumer income cohorts to estimate the impact across the income-quintiles assessed in our 2026 Consumer Outlook, and find a ~225bps potential headwind from the YoY change in crude oil prices (~$120/barrel vs a simple average of ~$70 in 2025) on the lowest-income consumers, or ~135bps headwind at ~$100/barrel. As such, we see an over ~50bps headwind for consumer discretionary spending power for US households in aggregate in 2026, and ~135bps headwind for the bottom-quintile, assuming ~$100/bbl pricing holds. 

With that context in mind, McShane and her team analyzed the demographic exposure of major big-box retailers and found that Dollar General, Ollie’s Bargain Outlet, and Dollar Tree are among the retailers most exposed to working-poor households.

Walmart, Five Below, Target, and BJ’s Wholesale Club showed more modest exposure, according to the analyst.

“We also note that historically, during periods of elevated gas prices, DG has benefited from its close-proximity store model, which offered a convenient alternative for cost-conscious customers looking to avoid drives,” McShane noted.

However, she said, “However, given the rise in digital retail, WMT’s membership program Walmart+ may diminish this advantage as customers can now purchase same-day delivery.” 

With the national average for gasoline above $4, we have already detailed emerging shifts in consumer behavior at gas stations and convenience stores. Actual demand destruction should set in at $ 5+ gas.

Read:

• Here’s What Happened Inside Gas Stations When Gas Hit $4

• Here’s What Happened Inside Convenience Stores When Gas Hit $4

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