Can indie dollar stores compete with the big chains?
Low price is implied in the name when it comes to dollar stores, but there’s only so close to rock bottom a store can go. That’s a fact that mom-and-pop dollar stores have been struggling with. As dollar stores grew more popular, big chains moved into territory once run by independents, making it hard for mom-and-pops to say afloat.
Owners of dollar stores in some New York neighborhoods have begun upping their services to compete with Dollar Tree/Family Dollar and Dollar General, whose selection and prices they can’t beat, according to The New York Times.
Store owners report offering self-serve coffee, holding products for customers until they can pay for them and taking requests for items to stock. In neighborhoods with large minority and immigrant populations, stores have begun adding food and beverage products from manufacturers such as Goya. Some independents are also adding items such as air conditioners in the summer and heaters in the winter to better address the needs of local shoppers.
“It’s evolved beyond just being a 99-cent store,” Habib Abdul Musiwir, manager of 99¢ & Up Millennium Discount & Party Supply in East New York, told the Times. “We’re meeting the needs of the community.”
While some of the differentiators independents have tried may be relatively cheap to implement, there’s a concern about the increased operational costs that come with competing for customers with the big chains. And even if they had resources to revamp and move up-market, such a move would run the risk of alienating core customers.
On the chain store side, some have done just that. Aldi, the hard discount grocery chain, has made significant changes to its once-barebones offerings. The company relaxed its cash-only policy to allow for credit cards and made more natural/organic brands and fresh offerings available. The company has also begun renovating and remodeling its U.S. stores nationwide. It has also launched an upscale store concept in Australia.
There have recently also been accusations of edging stores out of the market thrown around between dollar store chains. The defunct chain Dollar Express has been engaged in an ongoing lawsuit with Dollar Tree alleging that the larger chain tried to sabotage the smaller one as it got off the ground, according to the Charlotte Observer.
- Mom-and-Pop Dollar Stores Fight to Survive as Chains Move In – The New York Times
- Aldi’s evolution leads to credit cards – RetailWire
- Aldi investing tens of millions in upgrading Chicago-area stores – Chicago Business Journal
- Dollar Tree fires new volley in Charlotte dollar-store legal battle – Charlotte Observer
DISCUSSION QUESTIONS: How can mom-and-pop dollar stores differentiate themselves in a space where low prices are the primary concern among shoppers? Is there hope for the independent dollar stores in a business dominated by large chains?