How America Learned to Love the Dollar Store

Market-research leader Neilsen studied the opening and closing of retail stores nationwide between 2001 and 2008 and published the winners and losers. The most affordable consumer alternatives saw growth with the super-cheap leading the way.

Dollar stores—they used to be known for racks of worthless trinkets spread out among some semi-useful bathroom and kitchen supplies, but today these thrifty behemoths have managed to expand their inventory and clientele enough to become one of America’s strongest industries. So much for the era of luxury.


Neilsen’s survey found plenty of losers, the biggest among them being toy stores whose outlets shrank almost 60% between 2001 and 2008. Those troubling figures could be attributable, in part, to a growing toy selection at dollar stores, a growth industry that has become a runaway winner with a 34% increase in retail locations since 2001.

Dollar Tree in particular, the country’s biggest discount variety store chain, saw a third-quarter 2008 marked by a sales increase of 11.6% and the opening of 68 new stores against 13 closures and 36 expansions and/or relocations. Family Dollar, another prominent dollar chain, just announced 9% growth in net sales in their most recent fiscal quarter. The franchise has even become one of the hottest commodities on the stock market, its shares doubling in value since January 2008.

While the dollar business model has historically revolved around putting a bunch of cheap merchandise in a store, outlets have now started targeting specific demographics. Most notable has been the work of Five Below (ie: everything under $5), which has made a spirited attempt to target the teen market with affordable t-shirts, posters, and cosmetics. They’ve even spearheaded a grass-roots viral marketing campaign on Youtube.

But the biggest part of that changing business model has been aggressive expansion. With almost the entirety of their inventory priced below $10, dollar stores are now offering everything from clothes to toys to a surprising variety of groceries. While the stigma surrounding the dollar rack has slowly subsided, consumers have started finding their way to the local buck stop. A recent survey from consulting firm WSL Strategic Retail found that 60% of Americans had visited a dollar store in the previous three months. But maybe most surprising was WSL’s findings that 49% of consumers earning $100,000 or more a year have also visited a dollar store in the past three months.

An offshoot of Americans’ appreciation for the dollar has been the rise of the supercenter. With Nielsen showing more than 100% growth among supercenter outlets, these do-it-all mammoth stores have been seeing unparalleled expansion. Of course, the industry king spearheading the rise of the supercenter has been Wal Mart, a company that has seen openings every month. With other companies like Target, Fred Meyer, Meijer, and Kmart/Sears furthering the supercenter movement, the industry is projected to bring in sales of $359.5 billion by 2011 according to industry b-to-b publisher HHC Publishing. But consumers will probably still be finding their way to the local dollar rack as well. 

Big Think
Sponsored by Lumina Foundation

Upvote/downvote each of the videos below!

As you vote, keep in mind that we are looking for a winner with the most engaging social venture pitch - an idea you would want to invest in.

Keep reading Show less
Videos
  • What distinguishes humans is social learning — and teaching.
  • Crucial to learning and teaching is the value of free expression.
  • And we need political leaders who support environments of social peace and cooperation.


A bionic lens undergoing clinical trials could soon give you superhuman abilities

We're talking Ghost in the Shell type of stuff. 

popular

Maybe you watched Ghost in the Shell and maybe afterwards you and your friend had a conversation about whether or not you would opt in for some bionic upgrades if that was possible - like a liver that could let you drink unlimitedly or an eye that could give you superhuman vision. And maybe you had differing opinions but you concluded that it's irrelevant because the time to make such choices is far in the future. Well, it turns out, it's two years away.

Keep reading Show less

The philosophy of tragedy & the tragedy of philosophy - with Simon Critchley

Tragedy in art, from Ancient Greece to Breaking Bad, resists all our efforts to tie reality up in a neat bow, to draw some edifying lesson from it. Instead it confronts us with our own limitations, leaving us scrabbling in the rubble of certainty to figure out what's next.

Think Again Podcasts
  • Why democracy has been unpopular with philosophers
  • Tragedy's reminder that the past isn't finished with us
  • …and why we need art in the first place
Keep reading Show less