Dollar Stores Get More

Consumers shopping, spending more at small-format value retailers

COLUMBUS, Ohio -- Consumers are shopping and spending more at dollar stores and other small-format value retailers compared with a year ago. And, despite an improving economy, most dollar store shoppers will continue to patronize dollar stores and will spend more than they did last year, reported Retail Forward in its Food, Drug, Mass Shopper Update on the dollar store sector.

While a tough economy can drive shoppers to "try" extreme value concepts like dollar stores and other small-format value retailers, shoppers keep coming back for more, the report [image-nocss] said.

According to Retail Forward's ShopperScape consumer research, nearly three-fourths of all U.S. primary household shoppers have shopped at a small-format value retailer in the past six months. This is more than have visited a supercenter in the same timeframe. And, more than one-third of all consumers shop dollar stores or another small-format value retailer on a regular monthly basis.

In addition to shopping the format more, consumers are spending more. Nearly one-fourth of small-format value store shoppers report that they are spending more at dollar stores compared with a year ago. "It's all about the bargains," said Nick McCoy, senior consultant with Retail Forward and author of the Food, Drug, Mass Shopper Update and co-author of the company's recently released Dollar Stores Industry Outlook.

"Budget concerns and the love of a good deal are top reasons consumers are spending more at dollar stores and other small format value retailers," McCoy addsed.

Retail Forward's ShopperScape consumer research also revealed:

Who Shops the Format. While small-format value stores generally appeal to middle-aged and older, lower-income consumers, they continue to attract more affluent shoppers as well. More than one-third of monthly small-format value store shoppers have household incomes of $50,000 or more. Why They Keep Coming Back. Three-fourths of dollar store shoppers shop the format simply because they enjoy the experience. And most believe that dollar store prices are as good as or better than they can find at Wal-Mart. What They Buy. Basic general merchandise products such as cleaning supplies, paper products and greeting cards are the top category draws for small-format value retailers. ShopperScape consumer research also indicates that while dollar store players continue to expand their food assortments, they are a long way off from becoming a food shopping destination. How They Shop. Shoppers indicate that the majority of trips to a dollar store or other small-format value retailer are typically planned trips; however, more than one-fourth of dollar store shoppers say their last trip was on impulse with no particular purchase in mind.

What are consumers buying?

Household cleaning or paper products (45%) Greeting cards or gift wrap/bags (34%) Snack foods (26%) Candy/gum (24%) Home d acor (18%)

What do consumers spend? ($17)

Shopping more at dollar stores now vs. last year? (32%)

Dollar store penetration by household income

(shopped in past six months)

< $20,000 (59%) $20,000-$29,999 (57%) $30,000-$39,999 (51%) $40,000-$49,999 (47%) $50,000-$74,999 (43%) $75,000-$99,999 (37%) $100,000+ (29%)