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How are Dollar Stores Keeping Up?

Despite the rising prices, both within dollar stores and beyond, shoppers are still turning to discount retailers to save. Many consumers are changing their shopping habits, prioritizing essentials over discretional purchases. Dollar stores are on the benefitting end of this change, selling everyday items and household staples at a more affordable price point. Historically, dollar stores target households with an income of $40,000 or less. Now, with high gas prices and grocery prices, the dollar store customer demographic has expanded.

 

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Dollar Stores Retain Customers in Inflationary Environment

Cash-strapped shoppers have always turned to dollar stores for cheaper alternatives. Yet, with Dollar Tree recently raising its base price point from $1 to $1.25 in November 2021, many speculated a grim outcome. Though a survey conducted by Coresight Research from December 27th to January 3rd found a 6.2 percent drop in Dollar Tree customers compared to the two weeks prior, shoppers are still turning to the discount chain. This is demonstrated by Dollar Tree’s 4.4 percent increase in sales as of April 30th, 2022, compared to the same time last year.

 

The three major dollar store brands have made changes to capture consumers from different income levels. For example, Dollar General’s popshelf concept offers higher-end goods for around $5 and has announced expansion plans for the store. Dollar Tree Inc’s combo stores, featuring both the Dollar Tree and Family Dollar banner, target shoppers willing to pay more for additional options and better value.

 

You can read more about dollar stores’ new concepts here.

 

These initiatives are proving well for the dollar store chains. In Dollar Tree Inc’s earnings report, including both Dollar Tree and Family Dollar, executives expect net sales for 2022 to range between $27.76 billion and $28.14 billion, compared to $26.1 billion for 2021. Dollar General expects a ten percent to 10.5 percent growth in same-store sales.

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