You may be surprised to learn that dollar store shoppers are not so different from the broader spectrum of shoppers. While there may have been implications in the past that dollar store shoppers are unique, today’s Americans are often less concerned about the brand name on their receipt and more interested in the service, value, and selection that they receive.
With Dollar Tree recently celebrating the opening of their 15,000th store, this trend towards shopping at dollar stores can no longer be ignored. With more than 26,000 low-cost stores under the Dollar Tree and Family Dollar umbrella, as well as the astronomical increase of Dollar General sales from $9.5 billion to $23.47 billion in the past ten years, this segment is demonstrating strong growth potential. And it’s becoming clear that these shoppers are defying the traditional stereotype.
What Areas Are Dollar Stores Targeting?
Rural America is increasingly spending more of their dollars in deep-discount retailers. Leadership for these dollar stores has seen a shift in shopper behavior towards an interest in saving money and convenience – something that dollar stores offer in many small to mid-size towns.
Retail giants, including Walmart and Amazon, are strategically driving prices down, but there are a number of small towns in America that are not big enough to support retailers of this size. Dollar stores have positioned themselves to accommodate these shoppers by providing accessible, low-cost options, which tend to outweigh the lack of variety and low-stock levels.
When dollar stores are located in more suburban areas, however, shoppers are still visiting these stores to grab a few supplies on the way home from a busy day of work or school. The ease of running in and out of these smaller locations in a matter of minutes has a deep appeal to all ages. And like Walmart, Dollar General is investing in staff training and pay increases for managers. This could shift the focus to the store’s organization and cleanliness, subsequently appealing to higher-end shoppers.
Who Are These Dollar Store Shoppers?
The stigma of shopping at the dollar store is a thing of the past, with only 35% of Millennials stating that they avoid the deeply discounted retailers. By extension, that means that approximately 60% or more of this key demographic are frequenting their local dollar store. While that’s a significant number, more than 80% of the older Gen Xers and Baby Boomers are hitting the dollar store on a regular basis.
Dollar General, in particular, is looking for ways to appeal to this expanded demographic by offering a digital interface with their DG Go! mobile app and a sales-friendly website with convenient shipping options. Nearly 50% of respondents to a recent survey noted that they are utilizing digital services that are offered by local dollar stores, including digital coupons and loyalty programs. This demographic also appreciates the trend towards offering healthier food options, another initiative in which Dollar General is taking the lead.
As expected, individuals in the lower income brackets are more likely to be visiting the dollar stores on a regular basis. Surprisingly, as many as 30% of individuals who make above $50,000 per year are also visiting their local small retailers frequently. Nearly 50% of the shoppers, however, have a household income under $35,000.
What Dollar Store Shoppers Are Looking For
Dollar store shoppers in urban areas are overwhelmingly looking for low prices and accessibility, and not necessarily in that order. However, they are not as interested in purchasing fresh items from these discount retailers. Instead, they’re on the lookout for inexpensive cleaning supplies and other hard goods such as school supplies, gum and candy, and party supplies. More than 50% stick mostly to these types of products, citing concerns about cleanliness to explain their unwillingness to purchase fresh foods from these locations. While Dollar General strives to improve in this area, the low-price leaders are likely to find it difficult to meet the demanding standards of high-end shoppers and maintain their current business models, too. This leaves plenty of opportunity for local retailers who are able to go above and beyond to meet their requirements.
Rural shoppers are slightly different, in that they’re more willing to purchase a range of products from their local dollar store. This is probably due to the lack of options in their area, with their neighborhood Dollar General or Dollar Tree likely to be the only option for quick purchases. The product mix is different in these stores, and they are even smaller than those built in suburban and urban areas to complement the shifts in demographics and purchasing.
Today’s shoppers are confident in their needs and unafraid to shop where they find the highest level of convenience and the best prices – regardless of the name on the storefront. This trend has encouraged industry leaders to continue their investment in technology, allowing them a deeper understanding of shopper needs and an enhanced ability to provide relevant services. Other retailers, like local grocery stores, can keep pace with dollar stores by truly understanding their shopper and offering a superior omnichannel experience. This can best be accomplished by tight integration of key data between store locations, vendors and partners.