1. Stores & Formats

Dollar Store Growth Far Outpaces Other Formats

The Wall Street Journal this morning reports that “dollar stores, boosted by demand for less expensive groceries and goods in underserved rural areas, are far outpacing other retailers in opening new stores.

“Bricks-and-mortar shopping has rebounded strongly since the height of the pandemic, with many companies now adding new locations. Leading the pack are the two largest U.S. dollar-store chains, Dollar General Corp. and Dollar Tree Inc., which combined expect to have opened more than 1,300 net new stores by the end of the fiscal year that ends in late January, according to the companies … Dollar stores’ expansion shows their ability to thrive in far-flung areas that are too sparsely populated to attract other major retail chains, according to retail and real-estate analysts. Dollar stores are able to bring national buying power to places where the cost of labor and operations is lower than more urban and suburban areas.”

And, some context from the Journal piece:

“The growth of dollar stores has been significant over the past two decades. Dollar General now has roughly 18,800 stores across the U.S., compared with 5,000 in 2001, according to Coresight Research. Dollar Tree acquired Family Dollar Stores Inc. in 2015, and has since added more than 2,400 locations for a current total of more than 16,000.

High inflation has increased the appeal of dollar stores’ relatively low prices. But the expansion of the sector is rooted in structural changes in U.S. shopping habits that predate the current economic cycle, according to John Mercer, head of global research at Coresight. Surveys have shown that members of the millennial and Gen Z generations are more price-sensitive and tend to look for savings on retail and household goods in favor of spending more on services and experience-based purchases, he said.”

KC’s View:

The growth of the dollar store format, and its perfect positioning at a moment of inflation and recession concerns, means that it may be the biggest threat to many conventional stores – especially those without a definitive and differentiated value proposition and brand image.

I do find myself wondering, though … would it have made more sense for Kroger to acquire a dollar store chain rather than Albertsons?  Would such a move been more additive in terms of depth, and not just breadth?  

The post <strong>Dollar Store Growth Far Outpaces Other Formats</strong> appeared first on MNB.

View Original Article
https://morningnewsbeat.com
Do you like MorningNewsBeat's articles? Follow on social!