A dollar saved is… well, a dollar not spent – at least not yet and that’s what the mass affluent market has learned as we find ourselves entering our third year after the Great Recession ended. But saving money is nothing new for our nation’s discount retailers like Dollar General (NYSE:DG) , Dollar Tree (NASDAQ:DLTR) and Family Dollar (NYSE:FDO) who have been riding the wave of consumer’s self-imposed frugality since before the recession was on the radar screen of most people. The discounters were already well-positioned to capture the ever-increasing number of shoppers looking for deals on daily necessities. The economic downturn of 2008 only cemented in people’s minds the difference between the dollar stores and the seemingly more upscale retailers like Walmart (NYSE:WMT) and Costco (NASDAQ:COST). Many group the value or discount retailers all together in one happy market segment, but experts will tell you that there is a big difference when it comes to pricing, promotion and product mix. A feature online at DailyFinance detailed efforts to lure more affluent customers.
Upgrade In Aisle 7
The dollar stores have come a long way from the days when some stores were not well-lite, clean or had product that anyone would want to buy. Bottom-line they were not very ‘inviting’ and to top it off – most of their prices were more than a dollar. Well the recession changed most of that, but some consumers’ recollection of their past shopping experiences have not yet caught up with the new reality. As consumer confidence continues to improve, all retailers are looking at how they can attract more shoppers and get them to spend more each visit. The dollar store industry has re-invested profits in their stores and begun to upgrade the in-store experience. Some of the discounters have begun to look at establishing stores in more upscale areas in an effort to take the deals to where the people live. Dollar General believes the increased foot traffic will continue and is planning to open 625 stores to extend their market presence.
The Affluent Are Different
All kidding aside, retailing is a serious business and the grab for customers is at times an ugly fist-fight that rarely gets any attention. But as the middle-class continues to struggle to regain their footing even as unemployment declines , the affluent have gotten a taste of how the other 90 percent of us live, and they’re beginning to see more value in stopping by the local dollar store to see what’s so attractive about it. One improvement has been the introduction of more brand names like Tide, Kellogg’s and Pillsbury in the food aisles. That’s right, dollar stores do sell food – not just chips and drinks, but what the retail analysts term ‘quick-prep and ready-to-eat’ foods requiring little time to prepare, cook and serve. This places the dollar store in direct competition with the gas marts and even the drugstore chains that offer a variety of products to shoppers who come in just to get a prescription filled, end up walking out with more than that.
What Can You Get For A Dollar?
It’s amazing that you can really get a number of products for a dollar or less. What’s even more interesting is the number of products that are in the one to two dollar range – the upsale category – and that the quality is generally pretty good. The objective of dollar stores is to capitalize on the recent change in consumer spending patterns where fewer consumers are making that once a month big shopping trip to stock up for the whole month. More consumers, weary of the effort to plan and shop are opting for more frequent, albeit shorter trips to the store on a weekly or even twice-weekly basis. A stop at the dollar store is increasingly being added to more shoppers’ lists.