Dollar Stores Gain Popularity in Today’s Economy

by Claudia Bruemmer

Dollar stores are flush with shoppers these days, and they have a new clientele, people who never shopped there before. For years, most dollar store shoppers were poor people and seniors, but now the affluent have taken to shopping their neighborhood dollar store as well. As reported by the New York Times, affluent households are driving the current growth. In fact, 22 percent of the dollar store market consists of customers making over $70,000 per year, which is the fastest growing segment.

These new dollar store customers are employed and have money, but are afraid something might happen and so they’re trying to save. These are uncertain economic times; the stock market losses alone are cause for concern. Consumer research firms report shoppers are holding back on spending because of the uncertain future. Such conditions bode well for the dollar stores where people fill their cart and spend little money.

The three national dollar store chains are Dollar General, Family Dollar and Dollar Tree; however, there are also the independents and smaller chains like “99 cents only” stores. TopTenWholesale client Wally Lee of JC Sales, is director of marketing and technology for one of the large warehouse suppliers to independent dollar stores located south of Los Angeles. In fact, Mr. Lee was recently quoted in a feature article on dollar stores in the New York Times, wherein he gave some sage advice for entrepreneurs wanting to open a dollar store. Not surprisingly, Lee said a good store manager who loves to talk to people is a must, and he suggested having a Spanish speaking manager in some stores.

Evidently, the independents can flourish because they don’t have layers of corporate hierarchy to go through and can make changes quickly as required by the market. So the managers can tweak the inventory, change displays and try a number of different tactics on the fly to see what works without having to get corporate approval.

The independents get a supply of cheap goods from various sources, including leftovers from the corporate dollar stores such as distressed goods, closeouts, overstock, salvage merchandize, department-store returns, liquidated goods, discontinued lines, clearance items, ex-catalog stock, freight-damaged goods, irregulars, salvage cosmetics, test-market merchandise and bankruptcy inventories.

They also get goods from the secondary market coming from retail chains below the dollar-store channel, including unsold merchandise from Big Lots, which sends it down the chain to the liquidation level. To ensure a good supply of quality goods, JC Sales plans to start a pilot program with Via Trading, a wholesale supplier of overstock and clearance merchandise specializing in the sale of wholesale liquidations, wholesale overstocks and customer returns.

The new economy has been a boon for dollar stores and their suppliers, including the wholesale distributors and liquidators. Sales have been increasing with the three publicly traded chains up 5 percent in the first quarter. On the other hand, stores like Wal-Mart have been in decline for the last two years. Because of that, dollar stores are sprouting up all over, despite the fact few businesses are investing in building, equipment or jobs.

Dollar stores thrive because they have low store rents, buy cheap products, employ small staffs and pay low wages. Their profit margins have always been low, and now they must compete for a lower disposable income for most shoppers. As a result, they must innovate to survive and thrive.

That’s where good management can help, which the corporate chains can provide. There’s also an art to displaying merchandise to give the illusion that even a small display of goods looks plentiful. It’s an art to make the store look like it’s packed with merchandise, with high shelves along the walls. All empty space is filled with products or signage and yet it can’t be too cluttered. Last, but not least, the store needs to make it easy for shoppers to stroll up and down the aisles to see everything on display so they can buy on impulse.

Author:  Claudia Bruemmer

Claudia Bruemmer is a contributor to the TopTenWholesale Newsroom. Experience includes: Copy Editor SearchEngineLand (2012-present), Managing Editor ClickZ (1998-2001), Editor SearchEngineWatch (2007-2008) and freelance writer/editor since 2001 for SEMPO, ImediaConnection, SearchMarketingStandard, SearchEngineGuide, BruceClay and other sites. Prior to online work, Bruemmer was a Tech Writer for many years.

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