The rise of the dollar store

It seems to us that dollar stores have several appealing factors to grow their share.

According to a new study by The Urban Institute more than one-third of Americans (35%) currently have debt in collections, furthermore, the net worth of typical American households fell by about a third between 2003 and 2013, shows Russell Sage Foundation research. So with this in mind, it seems to us that dollar stores have several appealing factors to grow their share.

Like what for example? Well, not only do they offer ease and fun, but for one they often foster a treasure-hunt shopping experience that entertains and rewards with found essentials. They are also convenient - with small formats that people can get in and out of quickly if they choose, and accessible locations. And while we tend to think of dollar stores as fun holiday items and household additions, let’s not forget that their food presence continues to grow, including fresh, frozen, dairy and produce. Dollar General's expansion of perishable coolers has been "a key component" of the chain's strategic growth, said senior director-procurement Rich Szellan on his LinkedIn profile, as it was posted in August 2014. Family Dollar recently expanded its food mix by 400 items, and lowered prices on 1,000 other branded items in food, home care and other categories, across its 8,000+ stores.

In our opinion such initiatives are direct responses to SNAP benefit cuts and the continued plight of struggling U.S. households. With stay at home moms also on the rise - Pew Research Center analyzed federal government data and identified a rise in stay-at-home mothers, following three decades of decline. And the fact that many are at home because they are unable to find work, are disabled or are enrolled in school…incomes are stagnant and dollar stores may just be the answer people are looking for.  

The dollar channel is already one reason for Walmart’s lackluster sales trends and they’ll no doubt become an increasing threat to supermarkets too, as they use food to drive traffic and retain customers they gained in the recession and post-recession years.