2. Broad Appeal Maximizes Sales
According to Euromonitor data, sales at variety stores, which includes dollar stores, increased 6.8% to $57.9 billion during This increase was more than double the overall retail industry; however, sales are expected to moderate to 5% for 2017.
Dollar stores continue to lead the retail industry in store openings. Dollar General had 13,600 stores as of June 2017, and was planning to open another 1,000 by the end of the year. Dollar Tree plans to expand its 14,200 stores to more than 25,000.
Dollar stores excel at appealing to lower-income consumers in areas mass merchandisers don’t serve well and providing customers with greater convenience and higher-income consumers with bargains, especially during an economic downturn.

3. Accumulating Many Dollars
For its fiscal Q (ending July 29), Dollar Tree reported $5.28 billion in sales, an increase of 5.7% from Q1 sales. Same-store sales increased 3.9% at Dollar Tree and 1.0% at Family Dollar. The company has adjusted its forecast for 2017 by +0.6–+1.5%.
Dollar General reported Q (ending August 4th) sales of $5.83 billion, an increase of 8.1% from Q1. Same-stores sales increased 2.6%, driven by larger transactions and more foot traffic. Consumable and seasonal sales increased and home items decreased.
The next two biggest retailers in the category are Fred’s, with estimated sales of $2.2 billion, and 99 Cents Only, with estimated sales of $2.0 billion.

4. Going Head-to-Head with the Grocery Industry
Of the estimated $1.2 trillion Americans spent on groceries during 2015, approximately $29.4 billion, or 2.4% of the total was spent at the major dollar store chains. The amount is forecasted to increase 5.9%, to $31.1 billion, for FY 2017, and a 2.5% share.
In the overall grocery market, the amount spent at dollar stores was more than the $26 billion spent at convenience stores and the $17 billion spent at discounters, such as Aldi. Major dollar-store chains are planning to add more fresh produce and other food items.
Challenges in the grocery category for dollar stores include lower grocery prices, competition from Walmart and cuts in the SNAP program, formerly the Food Stamp Program, as between 500,000 and 1 million of the poorest Americans lose benefits.

5. Not Afraid of the Amazon/Walmart Retail Duopoly
During June 2017, Amazon announced that it will begin offering discounts to Amazon Prime members who receive US government aid, potentially hurting both dollar stores and Walmart, which both have a significant portion of their customer bases on SNAP.
Alternatively, analysts at Morgan Stanley do not see a major threat from Amazon since dollar-store shoppers are less likely to shop online and fewer in this market say they will increase online buying (5%) than among affluent shoppers (14%).
Since 73% of dollar-store shoppers buy items on an as-needed basis, such as party or daily-use products, online shopping is a poor substitute; however, 71% go to Walmart to purchase multiple items, making it more vulnerable.

6. Dollar-Store Shoppers
According to Nielsen data, 43% of Americans with household incomes of $29,000 or less said they shopped at dollar stores during 2016, more than at any other retail format that Nielsen tracks.
Almost a quarter (23%) of those earning more than $70,000 said they shopped at dollar stores during According to The NPD Group, approximately 25% of dollar-store customers have annual HH incomes of $100,000 or more.
Dollar Tree shoppers are more likely to visit arts & crafts, vintage/thrift, check-cashing and hobby stores while Dollar General shoppers more often visit check-cashing stores, auto parts stores, moving companies and seafood restaurants.

7. Advertising Strategies
Emphasize the convenience of shopping at dollar stores, including many more locations in most neighborhoods, time savings and availability of everyday items.
Target Millennials with a “Why Pay More?” campaign, contrasting items that cost more with those that cost less.
Consider promotional and cross- advertising partnerships with the local stores where dollar-store shoppers are more likely to visit (see Consumer Insights in the Profiler).

8. New Media Strategies
Introduce new products via your app or text-message marketing.
Buy search engine ads that appear during consumer searches for household products with the search term, “near me.”
Propose ads on the weather and/or traffic pages of your station’s Website or app, featuring stock-up products for extreme weather events and/or the convenience of multiple locations on or near most major after-work commuting routes.