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Consumer ReportsRetailUS
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Description
Dollar stores enjoy strong penetration, with 89% of adults having shopped the channel in the last year. Importantly, more than three-quarters of dollar store shoppers understand the channel’s foundational positioning for being an inexpensive, good option for essential everyday items. Indeed, this low price strategy has served the channel well, driving shoppers to its doors as inflation led shoppers to seek out low price retailers. It’s expected the dollar store industry will continue seeing steady growth in the years ahead.
In the near term, low price strategies remain essential as the dollar store shoppers will eschew retailers who implement price increases. Yet, to continue growth momentum, the competitive retail landscape and threat of big retail suggests that channel purveyors should prioritize building shopper loyalty: 51% of category shoppers say they are not loyal to any dollar store.
At present, shopper loyalty is toward low prices and not a specific retailer. The reality is that there’s little discrepancy in traditional dollar store brand identities. There’s opportunity for players to develop a brand story that fuels allegiance and resonates with key demographic groups. Competitive strategies could include expansion of fresh, quality food and beverage offerings, upscale concepts and digital/tech advancements.
This report looks at the following areas:
- Market factors impacting dollar stores
- Opportunities for retailers to improve the dollar store shopping experience and build loyalty
- Dollar store retailers shopped in the last year and overall engagement
- Changes in shopping frequency of dollar stores in the last year
- Frequency of dollar store visits in a given month and duration of shopping experience
- A look into the resistant shopper: are they open to shopping the channel and what are the biggest barriers to engagement
- Categories shopped at dollar stores
- Types of food and beverages purchased at dollar stores
- Shopping habits of the dollar store consumer
- Attitudes toward dollar stores, including rationales regarding value, pricing, improvements, expectations and competitive threats
An evolving inventory of inexpensive unique items and brand names turns dollar store shoppers into treasure hunters who value low price over anything else.
Vince DiGirolamo, Director, North America Reports
Market Definitions
For the purposes of this Report, dollar stores are defined as retailers selling deeply discounted merchandise including name brand and private label products such as food, household supplies, health and beauty care and more, typically ranging in price from $1-20. Some dollar stores are known as single-price stores, offering one price for all merchandise in stores. Dollar stores include but are not limited to:
- Dollar General
- Dollar Tree
- Family Dollar
- Five Below
- 99 Cents Only
- popshelf
Table of Contents
Executive Summary
- What you need to know
- Market size & forecast
- Market predictions
- What consumers want & why
- Challenges & opportunities
- Challenge: dollar store shoppers are a fickle bunch
- Opportunity: build loyalty through quality food/beverage, upscale concepts, tech advancements
- Strategies to encourage retailer loyalty
Market Dynamics
- Market context
- Market drivers
- The US expanded by 1.4% in Q1 2024
- Graph 1: quarterly real GDP growth, 2020-24
- Annual inflation sits at 3% as of June, the lowest it has been in over three years
- Graph 2: headline CPI and shelter CPI, 2021-24
- The unemployment rate slightly edged up, but job growth remains solid
- Graph 3: unemployment rate, 2019-24
- Consumer sentiment remains down, but is expected to rebound soon
- Graph 4: consumer sentiment index, 2022-24
- Nearly 40% of consumers have seen their financial situations change for the better in the past year
- Graph 5: change in financial situation over the past 12 months, 2024
- For over a year, many households have seen their purchasing power grow due to wage growth outpacing the rise in prices
- Graph 6: wage growth and headline CPI, 2023-24
- Poor economy drives financially struggling shoppers to the dollar store channel
- Graph 7: attitudes towards dollar stores, by financial situation, 2024
- Financially insecure consumers are shopping essential categories
- Graph 8: items purchased at dollar stores, by financial situation, 2024
- Younger consumers present future opportunity
- Multicultural consumers present opportunity to drive growth
- Market size and forecast
- Dollar stores maintain strong momentum
- Consumers' continued focus on value will lead to industry growth in the years ahead
- Consumers' continued focus on value will lead to industry growth in the years ahead (cont.)
- Market comparison
- Dollar stores are contributing to the growth for other general merchandise stores
- Retail sales of general merchandise stores, by segment
- Retailer overview
- Dollar General
- Dollar General is a category leader with growth of 51% since 2018
- Dollar General launches popshelf as upscale concept
- Dollar Tree
- Dollar Tree and Family Dollar push past $30 billion in sales
- Family Dollar struggles prompting a shift toward combo store formats
- Graph 9: Family Dollar shopper, by key demographics, 2024
- Five Below finds niche as specialty retailer within the channel
- Graph 10: Five Below shopper, by key demographics, 2024
Consumer Insights
- Consumer fast facts
- Consumer fast facts (cont.)
- The dollar store consumer
- Dollar stores have widespread reach
- A solid constituent of dollar store shoppers are shopping more often
- Graph 11: dollar store shopping frequency compared to last year, 2024
- Targeting younger adults, particularly parents, is important to advancing channel sales
- Graph 12: dollar store shopping frequency compared to last year, by parental status, 2024
- Graph 13: dollar store shopping frequency compared to last year, by generation, 2024
- Majority of dollar store shoppers visit several times per month
- Graph 14: dollar store monthly shopping frequency, 2024
- Gen Z and parents have a weekly dollar store habit
- Graph 15: dollar store monthly shopping frequency, by generation, 2024
- Graph 16: dollar store monthly shopping frequency, by parental status, 2024
- Dollar store shopping tends to be a short experience
- Graph 17: average time spent shopping at dollar stores, 2024
- The resistant consumer
- Continuing to attract new users will help advance channel sales
- Graph 18: openness to shopping dollar stores, 2024
- Opportunity to attract non-shoppers with expanded grocery and improved quality
- Graph 19: reasons for not shopping at dollar stores, 2024
- Retailers shopped
- Dollar Tree attracts largest share of channel shoppers
- Graph 20: dollar stores shopped in past 12 months, 2024
- The dollar store channel attracts younger generations
- Graph 21: dollar stores shopped in past 12 months, by generation, NET – any dollar store, 2024
- Five Below is a favorite among Gen Z and younger Millennials
- Graph 22: dollar stores shopped in past 12 months, by generation, 2024
- Black and Hispanic consumers gravitate to dollar stores
- Graph 23: dollar stores shopped in past 12 months, by race and Hispanic origin, NET – any dollar store, 2024
- Black and Hispanic consumers significantly overindex shopping leading dollar store chains
- Graph 24: dollar stores shopped in past 12 months, by race and Hispanic origin, 2024
- A variety of dollar store retailers appeal to parents
- Graph 25: dollar stores shopped in past 12 months, by parental status, 2024
- Categories purchased
- Shoppers seek out consumable products at dollar stores rather than products that require some longevity
- Graph 26: items purchased at dollar stores, 2024
- Women shop seasonal, party, and crafts; men more likely to buy electronics
- Graph 27: items purchased at dollar stores, by gender, 2024
- Clothing and electronics are popular categories with Gen Z
- Graph 28: items purchased at dollar stores, by generation, 2024
- Black consumers focus on perishables and BPC items
- Graph 29: items purchased at dollar stores, by race and Hispanic origin, 2024
- Parents are most likely to shop categories beyond essentials
- Graph 30: items purchased at dollar stores, by parental status, 2024
- Food and beverage purchases
- Dollar store shoppers buy food products
- Graph 31: food/beverage items purchased at dollar stores, NET – any items, 2024
- Food & beverage purchases suggest impulse buys; snacks dominate food category purchases
- Graph 32: food/beverage items purchased at dollar stores, 2024
- Highly engaged dollar store shoppers buy more grocery items
- Gen Zs significantly more likely than the average dollar store shopper to buy alcohol, frozen foods and produce
- Graph 33: food/beverage items purchased at dollar stores, by generation, 2024
- Fresh foods, like dairy and produce, have high appeal to parents
- Graph 34: food/beverage items purchased at dollar stores, by parental status, 2024
- Black consumers shop dollar store food categories as a necessary resource
- Graph 35: food/beverage items purchased at dollar stores, by race, 2024
- Shopping habits
- The threat of big retail
- Graph 36: attitudes toward dollar stores – competitor options, 2024
- Upscale dollar stores provide opportunity
- Graph 37: attitudes toward dollar stores – upscale concepts, by Hispanic origin; parental status, 2024
- Browsing aisles and buying too much are common habits
- Graph 38: dollar store shopping behaviors, 2024
- Boomers browse the store
- Graph 39: dollar store shopping behaviors, by generation, 2024
- Few dollar store shoppers shop online, use apps or coupons
- Graph 40: dollar store shopping behaviors – digital/coupon behaviors, 2024
- Gen Z most likely to engage with dollar store apps and online shopping
- Graph 41: dollar store shopping behaviors – digital/coupon behaviors, by generation, 2024
- Attitudes toward dollar stores
- Most shoppers understand the channel's value positioning
- Graph 42: attitudes toward dollar stores – shopping experience, 2024
- Parents enjoy the thrill of the hunt
- Graph 43: attitudes toward dollar stores – shopping experience, by parental status, 2024
- Maintaining low price/value strategy is essential
- Graph 44: attitudes toward dollar stores – impact of prices, 2024
- Inflation has driven younger adults and parents to shop dollar stores more often
- Graph 45: attitudes toward dollar stores – impact of prices, by parental status, 2024
- Graph 46: attitudes toward dollar stores – impact of prices, by generation, 2024
- Dollar store expectations and improvements
- Graph 47: attitudes toward dollar stores – product offerings, 2024
- Highly engaged demographics more likely to note improvements, but have higher expectations
- Graph 48: attitudes toward dollar stores – product offerings, by generation, 2024
- Graph 49: attitudes toward dollar stores – product offerings, by parental status, 2024
- Improve penetration among men by leveraging name brands and digital features
- Graph 50: attitudes toward dollar stores – product offerings, by gender, 2024
- Black shoppers see channel improvements
- Graph 51: attitudes toward dollar stores – product offerings, by race and Hispanic origin, 2024
- Challenges for the dollar store channel
- Graph 52: attitudes toward dollar stores – preferences; environmental impact, 2024
- Highly engaged shoppers are among the least loyal
- Graph 53: attitudes toward dollar stores – preferences; environmental impact, by generation, 2024
- Graph 54: attitudes toward dollar stores – preferences; environmental impact, by parental status, 2024
Innovation and Marketing strategies
- Competitive strategies
- Strong pipeline of promotional activity, supported by digital efforts
- Dollar General ramps up promotional activity
- Five Below taps online shoppers for early launch of back-to-school season
- Dollar Tree upgrades digital presence for its brands
- Pushing digital coupons via DG app
- Connect with consumers to build loyalty
- Dollar General leverages celebrity partnership
- NASCAR brings visibility to Dollar Tree and Family Dollar brands
- Five Below creates a unique shopping experience with in-person event
- Innovative retailers create space for upscale concepts
- Five Below targets young adults with inexpensive decor
- popshelf focuses on eclectic, trendy merchandise
Appendix
- Market definition
- Forecast methodology
- Forecast fan chart methodology
- Consumer research methodology
- Consumer research questions
- Generations
- Abbreviations and terms
Description Table of Contents
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