Consumer is stronger and better than feared, says TD Cowen's Oliver Chen

Core Insights - The retail sector is experiencing a bifurcation, with strength at the high end and pressure at the middle and low segments of the market [2][11] - Walmart is highlighted as a strong performer, leveraging AI and first-party data for supply chain improvements and digital advertising [2][6] - Target is seen as a work in progress, needing to enhance its store experience and supply chain to compete effectively with Walmart [4][5] Company Performance - Walmart is expected to perform well during the holiday season, with a slight increase in holiday forecast to 4-5% [3] - Target has recently seen a nine-day winning streak but still lags behind Walmart in terms of overall performance [4] - Costco is identified as a strong opportunity, with a high customer renewal rate of 92% and a focus on value through its Kirkland brand [6][7] Consumer Behavior - Consumers are spending more due to rising costs, but the overall sentiment remains weak, particularly among middle and low-income groups [8][10] - There is a trend of consumers trading up or down, indicating a shift in purchasing behavior towards budget-friendly options while still seeking quality [11] - The impact of tariffs is still being felt, with some products not yet reflecting the increased costs [8][9]