Dollar Stores a Fast-Growing Shopping Phenomenon

Shopping at dollar stores is becoming an increasing part of American life, according to ACNielsen U.S.. An ACNielsen Homescan consumer panel analysis found that 52% of U.S households shopped at dollar stores such as Family Dollar, Dollar General and Dollar Tree in 1999, up from 47% in 1998.

Although dollar stores are concentrated in rural areas and in the South, they have penetrated all census regions. Among so-called “heavy” dollar store shoppers (the 33% of customers who account for more than 80% of the channel’s revenue), more than half (58%) come from households classified as either poor or “getting by” (less than $40,000 annual income for a four person household).

“Dollar stores have carved out a successful niche for themselves,” according to Todd Hale, senior vice president, ACNielsen consumer analytics. “In many cases they have been able to buy or lease low-cost stores in poorer areas. Their strategy in offering low prices, a wide selection of basic staple items and a simple pricing structure is proving effective in appealing to the lower income populations they serve.”

An analysis of the top 10 product groups sold in dollar stores shows that the channel continues to take share away from other channels.

“While moving from a 2.7% to 3.1% share within the detergent product group, for example, may not seem dramatic, annual detergent product group sales total nearly $8 billion,” Mr. Hale said. “Capturing an additional four tenths of a percentage point of share shifts nearly $32 million to the dollar store channel. This channel is more than nibbling away at some of the other channels; it’s taking a significant bite out of portions of their business.”