Inflation Is A Major Factor In The Boom Of Dollar Discount Stores Opening
Traditionally reserved for affordable generic goods, in recent years dollar discount stores have been experiencing an influx of popular household brands. According to Axios, the trend began in 2019, steadily picking up steam each subsequent year — by 2022, the number of U.S. dollar-store chains had reached more than 34,000. To give you an idea of how staggering that number is, a recent study found that it exceeded the total number of McDonald’s, Starbucks, Target, and Walmart locations in the U.S. combined.
Speaking with Axios, GlobalData managing director Neil Saunders stated, “Dollar stores are one of the fastest growing channels in retail. They’re adding loads of stores, are attracting new customers, and seeing their share of wallet rise.”
Between the first quarters of 2022 and 2023, Placer.ai, a company that analyzes location intelligence metrics and foot traffic, told Axios that visits to Dollar Tree, Family Dollar, and Dollar General increased. In fact, almost half of the new stores that opened in the U.S. in 2021 were chain dollar stores. Research done by the Institute for Self-Local Reliance revealed that dollar store openings are happening at “a degree of momentum with no parallel in the history of the retail industry.” Dollar General plans to open an additional 1,050 locations in 2023, while Dollar Tree is eyeing another 650.
One of the major factors spurring this unprecedented change to the landscape of retail is inflation. Rising costs have pushed people to search for more affordable grocery and essentials outlets. From coffee to condiments, peanut butter and plant-based products, dollar stores are looking more and more like regular grocery stores each day. Sometimes prices even exceed $1.
The J.M. Smucker Company is planning to stock dollar store shelves with seasonal flavors of its packaged Dunkin’ coffee. Company spokesperson Frank Cirillo told Axios, “that means delivering the high quality [consumers] can trust, the variety they desire and the affordability they expect.”
Food and beverage giant Kraft Heinz is focusing on “meal solutions that make the dollar go further” according to their chief sales officer Cory Onell. One product they’ve reconstructed for discount stores is Lunchables, which sell for $1.25. Along with Lunchables, Kraft Heinz sells Taco Bell-branded products and its popular Classico pasta sauce line at dollar stores. As a result, the company’s distribution to dollar stores has increased 7% in the last year.
J.M. Smucker Company and Kraft Heinz aren’t the only majors getting in on the dollar game. Danone North America, the company behind Silk, Oikos, and International Delight, is aiming to bring their portfolio of yogurt and coffee creamers to discount shelves. They anticipate a 40% in growth for its International Delight brand, which has become the “exclusive branded coffee creamer” at Dollar General.
Even Beyond Meat has joined the trend and is now available at Dollar Tree for under $2. That spells great news for consumers looking for alternative protein options yet are on a tight budget. Currently, despite expansive growth, dollar stores still only represent 2.1% of national household food purchases according to a Tufts University study. That aside, if it continues, this growing trend is sure to shake up the retail space.
