3 Retail Stocks To Beat Tariffs In Back-To-School 2025

Picture this: it’s July, and the summer sun is blazing, but parents are already scouring stores for backpacks and pencils. Why the rush? Tariffs are looming, threatening to jack up prices on everything from sneakers to laptops. I’ve been watching this unfold, and it’s fascinating how families are adapting—shopping earlier, hunting deals, and rethinking what “essential” really means. The back-to-school season, a retail goldmine second only to the holidays, is facing a unique challenge in 2025. Let’s dive into how tariffs are reshaping this critical shopping period and spotlight three retail stocks poised to come out on top.

Navigating the Tariff Storm in Retail

The back-to-school season is no small potatoes—it’s a massive revenue driver for retailers. But this year, tariffs are throwing a wrench into the works. According to a recent survey, over half of shoppers are worried about import duties driving up costs, with inflation still nipping at their heels. Families are expected to spend around $858 per household on school essentials, a slight dip from last year’s $874. That’s not a collapse, but it signals caution. Parents are shopping smarter, hitting stores as early as June to dodge price hikes.

What’s behind this shift? Tariff-driven inflation is starting to show up in everyday items. For instance, apparel prices ticked up 0.4% in June, and household furnishings climbed 0.7% in July. Retailers are feeling the squeeze, but they’re not passing all those costs onto consumers—yet. Instead, they’re getting creative, stockpiling inventory, diversifying supply chains, and leaning on discounts to keep shoppers coming. For investors, this is where things get interesting: not all retailers are created equal in this environment.

Consumers are being cautious, but they’re not cutting back entirely—they’re just hunting for value.

– Retail analyst

Why Tariffs Are Changing the Game

Tariffs, especially on imports from countries like China, are hitting back-to-school staples hard. Think backpacks, pens, and tech gadgets—most of these come from overseas. With duties as high as 30% on some goods, retailers face a tough choice: absorb the costs and take a hit on margins or pass them on and risk losing customers. Many are choosing a middle ground, using strategies like early inventory purchases to delay price spikes. But as stockpiles dwindle, the impact is starting to creep into store shelves.

Here’s the kicker: consumers aren’t sitting idly by. A whopping 67% of families started shopping by early July, the highest rate ever recorded. Why? They’re worried about prices climbing even higher when new tariff rounds kick in. This early-bird trend is a boon for retailers who can offer deals, but it’s also a warning sign—shoppers are prioritizing value like never before. Retailers that can’t keep up risk losing market share.

• Early shopping surge: 67% of families shopped by July, up from 55% last year.
• Budget tightening: Spending per household is down 2% from 2024.
• Deal hunting: 75% of parents are switching to cheaper brands or stores.

The Consumer Pulse: Cautious but Resilient

Is the American consumer crumbling under pressure? Not quite. Retail sales in July rose a solid 0.5%, following a strong 0.9% gain in June. That’s not the picture of a collapsing economy, but it’s not all rosy either. Consumer sentiment took a dip in August, with inflation expectations creeping up. People are feeling the pinch, and they’re responding by seeking out value-oriented retailers. In my view, this shift is creating a clear divide between winners and losers in the retail space.

Restaurants and staple goods companies are reporting sluggish sales, with customers opting for cheaper alternatives. Meanwhile, discount retailers and e-commerce giants are seeing a surge in traffic. It’s a classic case of shoppers trading down—choosing affordability over brand loyalty. This behavior is especially pronounced during back-to-school season, where parents are balancing must-haves like notebooks with splurges like trendy sneakers.

The consumer isn’t weak, but they’re definitely pickier about where their dollars go.

– Industry expert

Three Retail Stocks to Watch

In this tricky retail landscape, some companies are better equipped to handle the tariff storm. I’ve zeroed in on three retail stocks that stand out for their ability to deliver value while protecting their margins. These are businesses that thrive when consumers are pinching pennies, and their strategies make them solid picks for investors looking to capitalize on the 2025 back-to-school season.

1. Costco: The King of Value

Costco is a retail juggernaut, and it’s flexing its muscle in the face of tariffs. Known for its low prices and loyal membership base, Costco has a knack for keeping costs down without sacrificing quality. How do they do it? For starters, they lean heavily on their Kirkland Signature private label, which offers better margins and shields them from some tariff impacts. If suppliers push back on price cuts, Costco can pivot to its own brand, keeping shelves stocked with affordable options.

Costco’s also been proactive, sourcing goods from non-tariffed countries and stockpiling inventory early. On its latest earnings call, management talked about rerouting products through its global network to dodge duties. The result? Consistent sales growth across categories, even as other retailers struggle. For back-to-school shoppers, Costco’s bulk deals on everything from laptops to lunchboxes are hard to beat.

• Private label strength: Kirkland Signature boosts margins.
• Global sourcing: Diversified supply chains reduce tariff exposure.
• Bulk appeal: Perfect for budget-conscious families.

2. TJX Companies: The Off-Price Advantage

TJX Companies, the parent of T.J. Maxx and Marshalls, is built for times like these. Its off-price model thrives when shoppers are hunting for bargains, and tariffs are only amplifying that trend. TJX’s flexible buying strategy lets it snap up branded goods at steep discounts, passing those savings onto consumers. Analysts are bullish, predicting TJX will steal market share from department stores as shoppers trade down.

In my opinion, TJX’s ability to offer name-brand clothes and dorm decor at a fraction of the cost is a game-changer. Their recent earnings outlook suggests strong sales momentum, and some experts even expect an earnings beat. With tariffs disrupting traditional retail, TJX’s opportunistic approach positions it as a go-to for back-to-school shoppers looking to stretch their budgets.

Off-price retailers like TJX are set to dominate as consumers prioritize value.

– Retail analyst

3. Amazon: The E-Commerce Powerhouse

Amazon’s no stranger to dominating retail, and back-to-school season is no exception. The e-commerce giant’s Prime Day in July was a massive hit, with school supply sales soaring 175% compared to last year. Shoppers flocked to Amazon for deals on everything from binders to kids’ apparel, drawn by competitive prices and lightning-fast delivery. It’s the kind of convenience that’s hard to resist when you’re racing against tariff-driven price hikes.

Amazon’s strength lies in its scale and data-driven approach. By leveraging Prime member data, they tailor offers to what shoppers want most, making back-to-school shopping a breeze. Analysts see Amazon continuing to grab market share, especially as online shopping becomes the go-to for deal-hungry parents. If tariffs keep pushing prices up, Amazon’s ability to offer discounts and fast fulfillment will keep it ahead of the pack.

Strategies Retailers Are Using to Combat Tariffs

Retailers aren’t just sitting back and letting tariffs eat their profits. They’re pulling out all the stops to stay competitive. Here’s a closer look at the tactics they’re using to navigate this challenging environment:

1. Stockpiling inventory: Many retailers loaded up on goods before tariffs hit, locking in pre-tariff prices.
2. Diversifying supply chains: Sourcing from countries with lower or no tariffs helps keep costs down.
3. Negotiating with suppliers: Retailers are pushing suppliers to share the tariff burden, reducing the need for price hikes.
4. Leveraging private labels: In-house brands offer better margins and more control over pricing.

These strategies are critical because passing 100% of tariff costs to consumers isn’t an option. Shoppers are already stretched thin, and retailers know that raising prices too much could drive customers to competitors. It’s a delicate balance, but the retailers we’ve highlighted are masters at playing this game.

What’s Next for Retail Investors?

As an investor, I find this retail landscape both challenging and exciting. Tariffs are creating headwinds, but they’re also shining a spotlight on companies that can adapt and thrive. The back-to-school season is a litmus test for how well retailers can balance profitability and affordability. With consumer spending expected to soften slightly, the focus is on value-driven players who “‘ve got the flexibility to weather the storm.

Costco, TJX, and Amazon are my top picks because they’re not just surviving—they’re capitalizing on the shift toward value. Their ability to offer deals, manage supply chains, and keep customers coming back makes them standouts. But don’t sleep on the broader retail sector. Earnings reports this week will give us a clearer picture of who’s winning and who’s struggling.

The retailers that win in 2025 will be the ones who deliver value without sacrificing margins.

– Investment strategist

Tips for Savvy Back-to-School Shoppers

While we’re talking about retail stocks, let’s not forget the shoppers driving these trends. If you’re a parent gearing up for back-to-school season, here are some tips to stretch your budget in this tariff-heavy environment:

• Shop early: Beat price hikes by hitting stores or online sales in July or early August.
• Go for deals: Look for promotions like Amazon’s Prime Day or Target’s price freezes.
• Consider secondhand: Pawn shops and resale sites offer steep discounts on essentials.
• Stick to a list: Avoid impulse buys by planning what you need.

These strategies aren’t just for shoppers—they’re a window into why retailers like Costco, TJX, and Amazon are thriving. They’re meeting consumers where they are: budget-conscious and deal-hungry.

The Bigger Picture: Retail in a Tariff-Driven World

Tariffs aren’t going away anytime soon, and their impact on retail is only starting to unfold. As we move through 2025, expect more price adjustments as retailers burn through pre-tariff inventory. The good news? Companies with strong supply chains and value-driven models are well-positioned to ride this wave. For investors, this is a chance to double down on retailers that can turn challenges into opportunities.

In my experience, markets reward adaptability. Costco’s global reach, TJX’s bargain-hunting prowess, and Amazon’s e-commerce dominance make them bets worth considering. The back-to-school season is just the beginning—keep an eye on how these companies navigate the holiday rush, where tariffs could play an even bigger role.

Retail Success Formula: Value + Adaptability = Market Share

The retail landscape in 2025 is a wild ride, but it’s not all doom and gloom. Tariffs are a hurdle, but they’re also separating the wheat from the chaff. By focusing on retailers that prioritize value and flexibility, investors can find opportunities even in turbulent times. What’s your take—are you bullish on retail despite the tariff storm?