Food Competition From Dollar Stores Growing

LAS VEGAS—Last year, grocery stores closed at their highest rate in two decades, but dollar store formats accelerated 5%, Produce Blue Book reports. During a recent workshop at the National Grocers Association convention, David Portalatin, NPD Group’s food industry advisor, said that dollar stores still have much ground to cover to compete with food, but that the segment is making strides.

“Eighty percent of dollar store shoppers buy food and beverage there,” he said, “but only 1.6% of food and beverage spend is in dollar stores.”

Dollar stores have been adding more fresh produce as they seek to meet the core needs of their customers. Competing retailers should remember who dollar store customers are: shoppers with children at home, larger families, lower income levels and more rural addresses.

Portalatin pointed out that NPD research found that 33% of all adults indicated they stopped by a dollar store in the past month, compared with 99% who went to the grocery store, 70% who visited mass merchandisers and 43% who shopped at warehouse stores.

Portalatin relayed five key ways retailers can compete with dollar stores:

• Frictionless commerce
• Leverage fresh
• Provide affordable family meals
• Offer snacks and beverages
• Offer prepared foods

To hear more from Portalatin, tune into Convenience Matters Episode 164, “Eating Trends in America” and Episode 97, “Exploring Convenience Food and Drink Trends.” And to read more about competition from dollar stores, see “The Buck Stops Where?” in the October 2019 issue of NACS Magazine.