Record-low consumer sentiment could boost Big Lots bargain appeal

Shoppers are arriving at discount stores with tighter budgets and less patience for anything that does not look like a clear deal. That pressure showed up in the University of Michigan’s early May reading, where consumer sentiment fell to a record low of 48.2, down from 49.8 in April, a sign that Big Lots may face more selective buying even as value-hunting gets sharper.

The drop was broad-based. The current economic conditions index slid to 47.8 from 52.5 in April, while the expectations index stood at 48.5, only slightly above April’s 48.1. About one-third of consumers spontaneously mentioned gasoline prices, and about 30% mentioned tariffs. Year-ahead inflation expectations eased to 4.5% from 4.7%, but Joanne Hsu, director of the University of Michigan Surveys of Consumers, said real income expectations have been declining since March and that Middle East developments are unlikely to lift sentiment meaningfully until supply disruptions ease and energy prices fall.

For a chain like Big Lots, those are not abstract numbers. They point to customers who are likely to be more price-sensitive at the register, slower to trade up on discretionary items, and more likely to postpone nonessential purchases until a markdown is obvious. That can help a value retailer when the assortment is sharp and the price message is easy to see, but it can also shrink basket sizes and make upselling harder when shoppers are already focused on fuel, rent, groceries, and the next gas fill-up.

The company is still rebuilding after filing for Chapter 11 bankruptcy in September 2024. Variety Wholesalers acquired 219 Big Lots locations out of bankruptcy, finalized the deal in January 2025, and said it planned to reopen 132 stores across 14 states in May 2025 under the Big Lots brand. The new ownership said shoppers would see remodeled stores, closeout deals, and added merchandise such as family apparel and electronics, all of which depend on customers believing the value is real the moment they walk in.

That makes the latest sentiment reading especially relevant on the store floor. When gasoline prices are front of mind and tariffs are part of the conversation, workers can expect more comparison shopping, more hesitation on impulse buys, and more pressure on promotions to carry the trip. For Big Lots, weak sentiment does not automatically mean stronger sales; it means every item, sign, and price point has to work harder to turn caution into a basket.