Global supply chain problems, record-breaking job losses and high inflation are driving buyers to seek a bargain. That’s good news for dollar discount stores – they’re proliferating faster than any other retailer.
In 2020, there were over 34,000 dollar stores in the United States. Popular chains include Dollar Tree and Family Dollar (both owned by Dollar Tree), Dollar General, 99 Cents Only Stores, and Five Below. The largest companies – Dollar General, Dollar Tree, and Family Dollar – account for almost half of new store openings in the United States.
But the massive growth did not come without criticism. Opponents argue that the wave of new discount stores opening in poor communities is giving their residents limited access to fresh produce.
On the corporate side, high inflation and supply chain issues are starting to weigh on margins. In the second quarter of 2021, same-store sales of Family Dollar, Dollar Tree and Dollar General fell significantly compared to previous quarters.
Even with weighing margins, discount chains have ways to adapt to keep prices low for consumers. Given the tough economic conditions, analysts say they see no signs of slowing dollar store growth. The question is, how can they reinvent themselves to respond to their criticism and improve their sales image?