With the holiday season underway, honestly, I’m stressed. Can I get everything my family wants? Did I forget anyone? Many consumers are likely in the same boat, navigating to-do lists—and looking for deals too. 

As we heard from Fed Chair Powell this week as well, American household spending remains elevated, even as sentiment nears historic lows. This year consumer sentiment has fallen, down from 70+ to around 53 in December, not far from the 2022 trough, near record lows. While spending behavior remains strong, sentiment indicators suggest consumers have been growing more cautious.

Either way you cut it, we noticed consumers are picky. Focusing on quality and price, they are demanding that both coexist. As investors, we are focused on the same right now. And interestingly, we see a parallel in the retail space between investment opportunity and what consumers are looking for: a clear value proposition. Several companies have recently drawn our attention. With factors like low or off-price models or because of their generally well-regarded brand may be in a turnaround:

• Low prices (e.g. Walmart absorbing tariff costs)

• Off-price models: off-price retailers, discount chains, and big-box stores offering budget-sensitive assortments have been outperforming. For example, TJ Maxx and Ross Stores have reported standout results.

• Brands like Gap and On Holding have noted higher full-price sell-through in recent periods

• Some retailers, including Lululemon and Deckers, have posted poor returns this year and are undergoing operational changes. They carry decent execution risk but inexpensive valuations. 

Across the board, value—not just low price—is a motivator. Something to consider as we go  into 2026, with lower Fed rates and expected stable labor market. 

As for the stress of gift giving this season, I’ve reminded myself I am fortunate enough to consider buying gifts for loved ones—a grounding perspective in a chaotic season.