Discount and dollar stores are known for their cheap treasures and unexpected finds. In a time when budgets are tight and consumers are seeking the most value for their money, discount and dollar stores – also known as variety stores – are maintaining their gains as retailers that consumers can also depend on for everyday items. We analyzed the latest location intelligence metrics to take an in-depth look at the discount and dollar store category and the consumer behaviors driving the rapid growth of the category.
Discount Dominance
Demand for discount and dollar stores has been on the rise for quite some time, and chains in this space have been growing their fleets to keep up. There are over 32,000 total dollar store locations in the U.S., with two companies dominating the rapidly expanding sector: Dollar Tree (which also owns Family Dollar), and Dollar General. In 2022, Dollar Tree opened 455 new stores and Dollar General opened 1,039 locations. And in 2023, Dollar General and Dollar Tree plan to open 1,050 and 650 new stores, respectively.
While both brands have a presence across most of the U.S., mapping out the companies’ visit share in each state – which is impacted by the number of locations but also by consumer preferences – reveals clear regional differences. The April 2023 Brand Dominance Map for dollar stores shows that Dollar Tree captured the most visits in the West, Mountain, and Northeast regions while Dollar General claimed the top spot in the majority of the Midwest and the South.
Q-Won
Although Dollar General and Dollar Tree are the dominant players in the space, smaller chains are also benefiting from the category’s success. Visits to the majority of discount and dollar stores in Q1 2023 were overwhelmingly positive. But in April and the beginning of May 2023, the top retailers – Dollar Tree, Family Dollar, Dollar General, and Five Below – all experienced some weekly year-over-year (YoY) visit gaps.
The week of April 10th, 2023 saw the largest visit gaps for all of the chains. However, the comparison to the week of April 11th, 2022 – which included Easter – likely contributed to this year’s YoY visit decline. Overall, the lackluster weekly YoY visits in April and the beginning of May 2023 came on the heels of a much stronger Q1 2023 and were quickly erased by a visit spike the week of May 8th, 2023.
Daily Discounts
Some of the visit growth of variety store chains in Q1 2023 can be attributed to the rising popularity of the “treasure-hunting” experience found in stores. But for many consumers, inflation is the primary motivation for turning to discount and dollar stores – and groceries and other essentials are at the top of their shopping lists. A recent survey concluded that grocery is now the top category shopped at discount and dollar stores, with some consumers likely skipping traditional grocery store and superstore visits and using dollar stores to fill-in between trips.
Analysis of baseline visit growth since January 2020 revealed that discount stores are outperforming the superstore and grocery categories – especially since January 2022 when inflation had already begun driving visits to discount and dollar stores.
Diving deeper into the visit data also suggests that essential shopping trips are spurring recent discount and dollar store visits. Location intelligence revealed that between Q1 2022 and Q1 2023 all four of the variety stores compared – Dollar Tree, Family Dollar, Dollar General, and Five Below – saw an increase in weekday visits, indicating that these stores are meeting more of consumers’ essential shopping needs.
Essentials trips are more likely to be mid-week when consumers are pressed for time and need to top-up on household or food items. And since the majority of consumers live within 10 minutes of a dollar store, in these instances consumers are likely attracted to discount and dollar stores for the convenience as well as the price.
The Bottom Line
Demand for discount and dollar stores continues to grow. To keep up, many of these retailers are moving full-speed-ahead with their store fleet expansion plans.
Behind the category’s boom is the rise in both “treasure-hunting” and value-consciousness in the current economic climate. For both kinds of visitors, discount and dollar chains continue to prove that they have plenty to offer.
For updates and more data-driven foot traffic insights, visit Placer.ai.
