I have to admit being a bit flummoxed by recent stories pitched to RetailWire around the prospects for dollar stores. The pitches have taken two angles, both ultimately questioning the future prospects of individual businesses if not the channel as a whole.
The first pitch posits that dollar stores have opened up thousands of locations over the past decade and have finally arrived at an over-stored state.
The second suggests that dollar stores have achieved great growth in recent years largely due to the Great Recession and its after effects. Surely, an improving economy, even at the modest three to four percent annual growth rates projected by many economists, will work against dollar stores.
Now, I have to admit that while not a dollar store shopper myself, there is plenty of evidence to suggest that Dollar General, Family Dollar, Dollar Tree and others fulfill a need for a large number of consumers.
While the economy has slowly improved in recent years, it is not unusual to hear from retailers, both inside and outside the dollar channel, that ads at the beginning of every month drive a greater lift than those in the back half. Food retailers will point to specific WIC (Women, Infants, Children) items helping to drive a particular brand's share of market.
It's true that retail organizations, similar to living organisms, have a life span and none goes on in its original state forever. As a kid, I can remember rummaging around Mickey Finn's (a so-called five and dime store) searching for the cheap treasures contained in its bins. Back then I probably never envisioned five and dimes going away, but they did. It wasn't until many years later that a new version emerged — the dollar store.
Are you more or less optimistic today about the prospects for dollar stores over the next five years than you were five years ago?