Dollar Stores Reaping Benefits of Higher Wages

With their core clientele having more earnings in their pockets, Dollar General and Dollar Tree are thriving.

August 26, 2016

GOODLETTSVILLE, Tenn. – Rising wages are boosting the profit margins of dollar stores, particularly Dollar General and Dollar Tree, The Wall Street Journal reports. Wages for full-time U.S. employees in the lower quadrant on the income scale jumped 3.1% during the second quarter from the same period in 2015, according to the U.S. Department of Labor.

That hasn’t gone unnoticed by dollar retailers. During a May earnings call, Dollar General CEO Todd Vasos said consumers are “probably feeling a little more confident and spending a little bit more.”

To cater to those shoppers, Dollar General increased the number of products between $1 and $5 in its stores, while Dollar Tree purchased Family Dollar recently as well. Both Dollar Tree and Dollar General have focused on smaller store footprints, which usually brings in more profits quickly, and enlarged their home goods and beauty categories.

Of course, with more money in their wallets, consumers might migrate to other retailers, but most analysts seem to think the core clientele will stick with dollar chains. However, dollar stores appear poised to continue grabbing consumers who are interested in saving money.

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