The Rise of Dollar Stores During the Pandemic: A Retail Success Story
Amid a depressed economy and the challenges of a pandemic, dollar stores like Dollar General and Dollar Tree experienced significant growth in sales and store openings. These stores catered to budget-conscious consumers seeking value and convenience. Despite the decrease in store traffic during the pandemic, same-store sales surged, showcasing the invincible dollar store concept. The pandemic-era shopping metrics also revealed the strong performance of dollar stores in retail sales, trips-per-household index, and spend-per-trip index. Dollar General and Dollar Tree attracted a diverse range of shoppers, with Dollar General appealing to higher-income consumers and Dollar Tree focusing more on general merchandise. The data highlights the resilience and adaptability of dollar stores in the face of challenging times.
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The Invincible Dollar-Store Concept It s an undeniable cause-and-effect: with a depressed economy, millions suddenly unemployed and a pandemic , many consumers flocked to dollar stores to avoid large crowds at major retailers and to buy more with their limited budgets. This combination led to Dollar General reporting a 27.6% increase of Q1 2020 sales to $8.4 billion, and then continued on a roll with Q2 sales increasing 24% to $8.7 billion. Although there was less Q2 store traffic, same- store sales increased 18.8% from Q2 2019. Dollar Tree, which also owns Family Dollar, recorded a 7.1% increase in same-store sales during Q1, with Family Dollar stores doubling same-store sales by 14.4%. For Q2, Dollar Tree s same-store sales increased 3.1% and Family Dollar 11.6%.
The Race to Open More Locations During Q3 2019, Dollar General opened 724 and Dollar Tree 256 net, new stores. Dollar Tree also renovated 247 Family Dollar stores, expanded 512 stores with snack departments and continued to test its Dollar Tree Plus concept with higher price points at 115 stores. As of August 2020, Dollar General had almost 17,000 stores in 46 states while Dollar Tree operated 15,479 stores in 48 states and five Canadian provinces. Dollar General stores continue to attract higher-income shoppers who want value and convenience. A larger percentage of Dollar Tree stores are located in the Southern US and typically offer more general merchandise, but less food items than Dollar General.
Pandemic-Era Shopping Metrics The dollar-store channel performed quite well in the three metrics Numerator has been measuring during the pandemic. For the week ending 8/16/20, dollar stores over-indexed in the retail-sales channel, at 130. By comparison, the online channel was 175 and liquor 146. Dollar stores were also in the top four of Numerator s trips-per-household index: Online 115, home improvement 105, bodega 102 and dollar stores 102. During the 16 weeks from 5/3/20 through 8/16/20, dollar stores index range was 98 to 105. Dollar stores scored even better in the spend-per-trip index, placing first among 16 channels measured, at 125 for the week ending 8/16/20, with the beauty channel second at 123, electronics third at 120 and office 119.
Dollar General Shoppers According to The Media Audit s Summer 2020 surveys in Toledo, OH and West Palm Beach, FL, women 18+ over- indexed at 113 and 108, respectively, for shopping at Dollar General during the past 6 months. A larger percentage (40.8%) of adults 18 44 in Toledo than West Palm Beach (35.1%) shopped at Dollar General, but West Palm Beach had a larger percentage (44.4%) of adults 55+ than Toledo (40.2%), because of the larger population of retirees in West Palm Beach. Ethnically, African-Americans over-indexed for shopping at Dollar General in both Toledo (119) and West Palm Beach (126) and a much larger percentage of Latinx Americans shopped at Dollar General in West Palm Beach (13.3%) than Toledo (3.3%).
Family Dollar Shoppers The Media Audit s Spring 2020 Detroit, MI and Summer 2020 Southern New Hampshire surveys reveal women 18+ also over-indexed for shopping at Family Dollar during the past six months, at 114 and 117, respectively. Being very different markets, a larger percentage (50.2%) of adults 18 44 in Detroit than Southern New Hampshire (40.6%) shopped at Family Dollar. The next largest age group in Detroit was 45 64 (37.5%), but in Southern New Hampshire 55+ (39.5%). A large percentage (36.7%) of African-Americans in Detroit shopped at Family Dollar, and over-indexed (183), compared to 56.1%/79 for Caucasian Americans. In Southern New Hampshire, 90.5% of Caucasian American adults 18+ shopped at Family Dollar.
Dollar Store Shoppers: Working Women and Working Mothers Women are the largest target audience for shopping at dollar stores in the four surveys from The Media Audit. Among working women 35+, 73.7% shopped Dollar General in West Palm Beach, FL and 72.0% in Toledo, OH. Although smaller percentages of working women 18 34 shopped at Family Dollar in Toledo (39%) and West Palm Beach (42.5%), they over-indexed at 125 and 157, respectively. Among working mothers who shopped at a dollar store, a large majority were ages 25 49: 75% shopped at Dollar General in Toledo, 77.7% shopped at Family Dollar in Detroit and 77.1% in Southern New Hampshire.
Advertising Strategies With the pandemic a boon for dollar stores and plans for significant expansion, these stores are major prospects for local media sales. TV stations with NextGen TV capabilities are able to offer these neighborhood stores a very cost-effective means to reach local consumers. Dollars stores can maximize their trips-per-store and spend-per-trip metrics with a strong presence on TV and other local media, promoting early-morning, midday and early-evening specials to attract commuters and people working at home during the day. During the winter, dollar stores could create and promote Snow-Day Sales, with decreasing prices as more snow accumulates throughout the day to motivate customers to visit despite the travel difficulties.
New Media Strategies As dollar stores open new locations, they can use social media for live, grand opening events and incentivize customers to post short videos about how much money they ve saved and how much they enjoy many stores expanded inventory. Use social media and the mobile channel to engage specifically with working women who over-index as dollar store shoppers. Emphasis not only promotions and other savings, but also the convenience of locations, especially for women working from home. As dollar stores add more fresh-food offerings, create social media posts to feature these items. Consider asking an employee to portray the store s green grocer not only to show the latest fresh foods, but also explain how they compare to conventional food stores.
