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Dollar Stores Are Exceeding Expectations

November 22, 2019 Natalie Golub

Dollar stores across the country are continuing to thrive in today’s shifting retail environment. Today, nearly 30,000 dollar stores exist nationwide, exceeding Walmart and McDonald’s combined, and Dollar General is planning to open 975 stores in 2019, making it the fastest expanding retail company. Dollar General is not the only dollar store prospering in an era where retail brick-and-mortar stores continue to adapt to digital competition. Dollar Tree and Family Dollar are also among the top five brands in terms of store openings in 2019.

The Customer Base Of Dollar Stores Is Growing

shutterstock_627117605 Convenience store checkout

Dollar stores appeal to many different customers of all income levels and age brackets. 90% of adults in the U.S. say they shop in discount retailers according to a survey conducted by the National Retail Federation (NDF). Although, dollar stores are predominantly located in rural lower-income areas, they are also performing well in all markets from affluent to lower-income, urban to suburban. The reasoning is that the allure of a good bargain is attracting higher-income consumers. 60% or more of Millennials are frequenting their local dollar store, and more than 80% of Gen Xers and Baby Boomers are visiting dollar stores on a regular basis. When deciding where to shop, Gen Z is more concerned about price and saving money than brand loyalty. The money saving approach to shopping is make dollar stores popular with this younger audience.

Dollar Stores’ Formula For Success

There are numerous reasons why dollar stores are thriving in today’s retail economy. The combination of factors that go into the success of dollar stores include:

  • Consumer Values:  Dollar stores can be seen as an adventure. There is something different each time, and uncovering a bargain can be exciting. One key reason dollar stores continue to grow is the allure of the bargain and the excitement in what a shopper might come across. Additionally, dollar store consumers are less concerned with brand names. The stigma of bargain shopping is a thing of the past.
  • Location:  Dollar stores are predominantly based in rural locations where rent and overall costs are lower. “The strategy when Dollar General first opened was to go where Walmart wasn’t,” said former Dollar General CEO David Perdue. The strategy of opening dollar stores where other large retailers are not makes them the “go to” locations for customers looking to grab a milk or other quick household items. Being convenient stops also makes dollar stores resistant to online competition.
  • Store Size & Set Up:  Dollar stores are much smaller and cost less to operate than Walmarts, Targets and other retail outlets. The store design is simple often with metal shelving, strip lighting and inexpensive signage. By offering no-frills shopping experience, dollar stores are able to save money.
  • Product Inventory:  Dollar stores don’t offer as much choice as larger stores, and they do not focus on carrying every brand and size, just the most popular ones. Carrying a limited number of items gives the dollar stores more buying power with suppliers to buy larger quantities at better prices. This lower cost serves its customers who may not have the disposable income to buy elsewhere or in bulk.

Dollar Stores Offer New Ways To Connect With Consumers

Shutterstock_1112247347 NFC - Near field communication, mobile payment

As the dollar stores customer base increases, this niche of discount stores is offering new ways to keep its loyal customers while continuing to expand its reach. To connect with Millennials and Gen Z shoppers, Dollar General now has a mobile app that offers digital check-out to skip the in-store line. The Dollar General app features real-time shopping lists and digital coupons.

Many dollar store chains have a large presence on social media. Dollar Tree’s Instagram page has more than 300,000 followers. A quick hashtag search for dollar stores produces endless ideas and inspiration, from #dollarstoredecor, #dollarstorecrafts and #dollarstorefinds. Each of these hashtags, that have thousands of followers, create ways to engage with dollar stores and the items they are selling.

Additionally, dollar store websites have become much more dynamic. The Dollar General website features a section for customers to get inspired with the items they can find in their local stores, DIY projects ideas and coupons. Dollar Tree also offers a blog with tips for holiday table décor, crafts, ideas for teachers and recipes.

Dollar stores recognize that younger consumers have different purchasing habits. Utilizing an online component, social media and a digital app enables dollar stores to reach younger audiences, engage with them online, and bring them into the stores.

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