Whether it is Dollar General, Dollar Tree or Family Dollar… discount stores are one of the hottest retail spaces in your local strip mall. And, actually now in the entire retail sector. In fact, off-price general merchandise stores and closeout stores are helping sustain momentum in retail sales.
Amid a soul-crushing year for retail, discount stores have opened more stores than closed them and many of them have been erected in new markets. According to reports, as of February 3, 2017, Dollar General has 13,320 stores and Family Dollar/Dollar Tree operates 14,200 stores in the U.S and Canada. The previous year alone they opened around 500- 600 new locations in the previous year.
Reaching new customers
These stores are not resting on their laurels; they are at work planning the extension of their reach within not just the discount sector of the market but beyond. One way in which they are doing this is through establishing new locations as freestanding locations. They are trying to get out of the strip-mall stigma. Also, they are opening in smaller markets and aiming to be the first off-price retailer in that area says Randy Blankstein of the Boulder Group. He also told National Real Estate Investor Online, that most markets can only bear one dollar store. This makes being the first one a top priority.
Calling the Millennials
Now dollar stores are not just trying to reach more of the same customer in different locations, they’re looking at a different demographic entirely- the Millennial. Dollar General has come up with two different store concepts. DGX has been through experimentation since 2016 in Raleigh, North Carolina and Nashville, Tennessee. This store is about half the size of the standard store and is appealing to the younger customer with high-volume checkout lanes, to-go goods for immediate consumption and “limited assortment of grocery offerings, pet supplies, candies and snacks, paper products, home cleaning supplies and an expanded health and beauty section.”
Dollar stores have had a share in the market from the beginning, but really gained traction during the recession. What’s interesting is that consumer behavior would predict that since wages and jobs are up that customers would forgo the discount stores to resume patronage at many of their old higher-priced stomping grounds. It seems though that there still is uncertainty around the financial landscape that have been pushing consumers to remain frugal with their spending. That coupled with the rise of e-commerce, may keep them afloat since they are more immune to the online shopping experience. All in all, off-price retailers may just be the unlikely savior of retail.