Dollar Stores Resistant To Economic Good Times

Jul 16, 2004

By George Anderson

Conventional wisdom once held that dollar stores grew quickly because a weak economy and consumer concerns about making ends meet made the format more attractive to shoppers.

It wasn’t uncommon for analysts and retail industry professionals to predict consumers would shift expenditures to other outlets when their mood about their financial prospects

Adam Bergman, a spokesperson for the Dollar Tree chain, however, doesn’t see it that way.

He told the Cleveland Plain Dealer consumers aren’t looking to buy everything they need in stores such as Dollar Tree and, because of that, “The stronger the economy gets,
the better our stores do.”

Mr. Bergman and others such as Family Dollar executive vice president George Mahoney can point to the growing popularity of dollar stores in very un-dollar-store-like environments,
such as the upscale Westfield Shoppingtown SouthPark mall in Strongville, Ohio, to support the theory that the trade channel is “economic boom proof.”

“Affluent customers appreciate the convenience dollar stores offer and they want to get good value for their money, too,” said Mr. Mahoney.

The numbers certainly support this viewpoint.

A survey by ACNielsen (a sponsor of RetailWire) found 49 percent of people making $70,000 or more a year report shopping at dollar stores.

Moderator’s Comment: Will the novelty of dollar stores wear off with affluent consumers and will they shift their
expenditures to other outlets with an improving economy? What do you see as the biggest challenges dollar stores face, in terms of consumer attitudes, to maintaining growth?

Many such as Kurt Barnard, president of Barnard’s Retail Consulting Group, point to the “sense of adventure” consumers feel in dollar stores to support
the notion the format will continue to perform well even in times of prosperity.

A consumer interviewed for the Cleveland Plain Dealer piece, Terry Novotny, provided anecdotal support for this theory, as well. “I love the variety here.
It’s great for fun stuff for kids, since they’re always breaking things.”

George Anderson – Moderator

Please practice The RetailWire Golden Rule when submitting your comments.

Join the Discussion!

Be the First to Comment!