“We’ve seen a bifurcation in the economy,” said Ken Fenyo, the president and head of advisory and research at Coresight. “So while the wealthy have done well and continue to do well since the Great Recession, there’s certainly a lot of the population that has not done as well. The dollar stores appeal strongly to that segment of the population. That’s probably the overriding reason we see for the growth in the format.”
Dollar General CEO Todd Vasos said in March that company data indicated that there was an increase in new customers during its most recent quarter compared to the same time last year, noting that they “skew younger [and] higher income” than traditional shoppers.
Dollar stores are able to open in areas other retailers wouldn’t because of their small size, Fenyo said.
“They can fit more easily into local real estate than, let’s say, a Walmart or Target or something that’s a bigger format,” Fenyo said. “That certainly means they can go in more places.”
Dollar stores are also better protected against the rise of online shopping, said Gus Faucher, the chief economist at PNC.
Some dollar store customers often have “less of an ability to access online retail,” Faucher said, because of shipping fees or lack of internet access or experience shopping online. Most of the goods these chains sell are food and daily essentials, which are less frequently purchased online and are for immediate consumption, limiting the appeal of waiting days or more for delivery.
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