I’ll be the first to admit I’m clearly out of the loop when it comes to having firsthand dollar store experience. But I want to understand the trend since this is the biggest growth category in brick and mortar retail. (Source: IHL Group)
- U.S. retailers will open 5,500 more retail locations than they close in 2018
- 46% of that expansion will be driven by just two U.S. chains — Dollar General and Dollar Tree.
But who shops at dollar stores? I shop at Walmart and I’m extremely frugal but dollar stores are the last place I would consider shopping for staples or for specialty items.
- I checked out one in NYC a while back. What an awful experience.
- The store was messy, dirty, junk all over the floor. The only people working there were at the checkout!
- Also, amidst all the messiness, I was able to make out that it was overly stocked with seasonal holiday and party items. I entertain a lot but I would never waste my money buying this junk.
- Experts have tried to put a good spin on this combination of messiness and holiday party/decorating items. They cite the stores’ “treasure hunt” vibe as the reason for the stores’ success.
IHL Group cites a disconnect between U.S. wages and inflation, mounting debt loads, and a shrinking middle class for the growth of dollar stores.
Dollar stores are also taking over in Canada led by Dollarama which has over 1,000 locations.
I’ve written about dollar stores previously since it’s been a bright spot in retail for a few years (even if I personally don’t get it). See below.
Dollar stores opened about 7,000 units in the last five years. Equates to a new dollar store opening in the U.S. every six hours for five years straight. That’s a lot of dollar stores. (Jan 30, 2017)
Dollar Stores are Booming. 1,900 new Dollar General stores opened in 2016 and there were significant increases in square footage for Dollar Tree and Family Dollar. (1/5/2017)
Dollar Stores Create a “Treasure Hunt Experience”: Dollar Tree changes their merchandising mix often creating “a treasure hunt experience.” Seasonal and variety categories account for 50% of Dollar Tree’s sales. Also worth noting, these stores are extremely ugly. (May 19, 2016)