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Walmart and Target’s Earnings Reveal How the Iran War is Changing How We Shop

It’s retail earnings season, and all eyes are on Walmart and Target. But this time, the story isn’t just about who sold more lawn chairs or who’s nailed curbside pickup better. Behind the numbers, the conflict in Iran is quietly shifting how Americans spend, save, and worry about the future. If you want to understand where consumer habits are heading, these two retail giants are the best place to start.

Here’s the deal: inflation, supply chain headaches, and rising oil prices are all tangled up with the global unrest. History shows us that when tensions flare in the Middle East, gas prices tend to spike fast. That means families have less wiggle room in their budgets. Walmart and Target often feel this pinch first—because when gas eats up more of your paycheck, you tend to cut back on everything else.

There’s also the messy side of shipping to consider. The Iran war has already forced container ships to avoid the usual routes, like the Suez Canal, opting for longer and costlier paths around Africa. This adds weeks to delivery times and hikes up costs. Target and Walmart depend on these supply chains for everything from electronics to clothes. When shipping gets pricier, either prices go up for shoppers or the stores take a hit on profit—which neither side wants.

What’s different now is how shoppers are reacting. Remember the pandemic “revenge spending” craze when everyone was buying whatever they could find? That vibe has faded. These days, people are cautious. I’m seeing more shoppers switch to store brands or hold off on pricey purchases. Walmart’s CEO put it simply: customers are “managing their budgets more tightly.” Translation: they’re spending less overall or at least trying to stretch every dollar further.

Target is in a bit of a tricky spot. Their brand is all about affordable luxury—those stylish, limited-edition items that feel like a small treat. But when things feel uncertain, many ask themselves, “Do I really need that $30 throw pillow?” Discretionary spending is the first to shrink, and Target’s upcoming earnings call will likely reflect that reality.

One trend that’s creeping back? Layaway and buy-now-pay-later (BNPL) options. When cash is tight and credit cards are maxed, shoppers want flexibility. Both Walmart and Target are expanding these plans. It’s a clever short-term move, but there’s a risk here: BNPL can hide the true financial strain. People might feel like they’re spending less now, only to face a big payment later. If the job market gets shaky, that can hit hard.

And then there’s online shopping. Both retailers have invested billions in building strong digital platforms, but higher delivery fees and shipping costs are squeezing budgets. Free shipping feels less “free” than ever, and I expect to see more minimum order thresholds or cuts to things like next-day delivery.

For investors watching these earnings, it’s about more than just sales numbers. If Walmart shows strong grocery sales but weak numbers elsewhere, it tells us shoppers are sticking to essentials. If Target’s profit margins shrink, it’s probably because discounts and promotions are back—and while those deals bring people in, they can also eat into profits if overused.

Not all parts of retail will be hit the same. Dollar stores usually do okay when wallets tighten, while specialty stores—think electronics or high-end clothes—may take a bigger hit. Walmart’s big grocery presence offers some protection; Target’s focus on discretionary items means more risk.

But keep in mind, Walmart and Target aren’t perfect mirrors of the whole market. They’re huge, with international operations that can hide problems at home. And their customer bases differ—Walmart leans more rural and lower income, Target more suburban and middle class. So, trends with one don’t always apply to the other or smaller players.

Then there are the wild cards. If the Iran conflict worsens and oil prices shoot past $100 a barrel, that’s when we could see real demand destruction—less driving, fewer store visits, and a slowdown in non-essential spending. Remember 2008 when $4 gas made families rethink summer trips and back-to-school shopping? That’s the level of impact we’re talking about.

On the flip side, sometimes markets panic too soon. If the conflict settles or oil prices cool off, retailers might bounce back quicker than expected. It’s always tricky to tell what challenges are just temporary shocks and what will stick around.

Technology could also shake things up. Both Walmart and Target are experimenting with AI for inventory and pricing, and new tech like in-store robots or app-based deals. These tools might help cut labor and shipping costs, but they’re not instant fixes. There’s a learning curve, and results so far have been mixed.

What to Watch for in the Reports

• Same-store sales, not just total revenue
• Comments on inventory and markdowns
• Management’s tone about the rest of the year—if they sound cautious, take it seriously

The effects of war, inflation, and supply chain disruptions don’t disappear overnight.

What This Means for You

If you’re a shopper, it’s a reminder to keep an eye on your budget—those “everyday low prices” might not stay that low forever. Investors should be cautious about jumping in too quickly before the situation clears up. And for retail execs, make sure your logistics teams have contingency plans in place—because surprises are the new normal.

Walmart and Target’s earnings will tell us a lot this quarter. Just don’t expect easy answers or a quick return to “normal.” The world—and the way we shop—are changing, whether we’re ready for it or not.

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