Dollar Stores Prosper Even in Good Economy
Low-income shoppers turn to discount stores to better manage household budgets.
Sep 04, 2018
ALEXANDRIA, Va. – Even in a good economy, low-income shoppers will seek value and convenience, and for this reason, dollar stores continue to grow their business, according a report from CNN.
“While the economy is doing very well, our core customer continues to struggle because, normally, her expenses outstripped her wage growth,” Todd Vasos, CEO of Dollar General, said on a recent analyst call.
Although unemployment is under 4% and consumer confidence is high, Vasos noted that the rising costs of health care and housing continue to be issues for low-income shoppers. Analysts predicted spending at Dollar General would slow as the economy gained steam and Americans traded up to big-box retailers, but sales at the chain’s stores that were open for at least a year increased 3.7% last quarter compared to a year ago.
An uneven economic recovery has sustained Dollar General, which sells basic merchandise to low-and-middle-income shoppers in rural and suburban America. The company has posted 28 straight years of same-store sales growth.
Dollar Tree also is seeing increased sales, with more spending on packaged foods, groceries, home essentials, clothes and personal care products. The chain that sells everything for $1 saw same-store sales jump 3.7% last quarter as compared to a year ago.
In 2015, Dollar Tree purchased Family Dollar, which sells most items for $10 or less. It caters to more urban and rural low-income customers than Dollar Tree, which targets suburban, middle-income shoppers. But Family Dollar sales missed analysts’ expectations, sending Dollar Tree’s stock tumbling.
In July, both Dollar Tree and Dollar General marked their 15,000th store opening. In the past year, Dollar General has opened more than 1,100 new stores.
