Bill Bittner

Dollar General Looks for Big Growth This Year

February 5, 2010

FROM RETAILWIRE:
When the economy took a downward turn, consumers began shopping in dollar stores in greater numbers than ever before. Now, as the economy begins to improve, many chains are looking to solidify past gains.... Do you see dollar stores continuing to achieve the type of sales and profit growth seen over the past couple of years?      [more...]

At the same time Dollar General is looking forward to a strong 2010, JP Morgan has downgraded their expectations for Dollar Tree sighting the loss of momentum from macro economic factors. Two factors have made the dollar store format successful recently. On one hand, manufacturers were caught with overstock that they had to get rid of somehow. Secondly, consumers became willing to try new products or even lower their quality standards in order to save some money. An economic turnaround is going to impact both of these.

Manufacturers will be very cautious going forward as they avoid future inventory buildups. Consumers will soon begin feeling better and be willing to go out on a limb in order to purchase the products they can now again afford. I am not sure how this will impact national brand sales. Consumers may find they are able to move up the quality scale by purchasing an upscale private label. This presents an interesting dynamic between the national brand on sale in a dollar store and the premium private label product.

Frankly, I hope the dollar store channel does not see continued increases because this would imply that the economic recovery is stalled. Better to see consumers willing to spend than continuing to fear the future.