The dollar store expansion: Number of dollar stores in the US expected to exceed 30,000 in 2016.

Wal-Mart, the mega retailer has over 5,000 stores in the United States.  We tend to think of Wal-Mart as the low price leader crushing prices to their rock bottom level by cutting costs at every corner.  However, there is an even lower cost option and many working class Americans are turning to these stores.  Dollar stores have seen a dramatic rise in numbers thanks to the ongoing effects of the recession.  There are more than 11,500 Dollar General stores in the United States (twice the amount of Wal-Mart locations).  The growth in dollar stores is reflecting the cash crunch many Americans are facing.  We’ve mentioned this in the past but many dollar stores have suddenly become low cost grocery stores as people struggle to get by.  This is a smart strategy to tap into the ever growing number of Americans on food stamps.  It is expected that by 2016 over 30,000 dollar stores will exist in the United States.

The dollar store movement

It is interesting to see the transformation of dollar stores.  I remember when these places largely sold over bought products or items that simply did not sell at larger retailers.  That is no longer the case.  These places now sell food and many big name brands have adjusted packaging so lower income households (a growing percentage of Americans) can purchase food.

This trend shows no signs of slowing.  Take a look at the growth of dollar stores:

dollar stores

By next year, there will be over 30,000 dollar stores in the United States.  This is a 25 percent growth rate since 2011.  Even Wal-Mart can’t meet this growth rate since it has grown at about 20 percent since 2011 in the number of stores opening.

There is a bigger market in cheaper retailers compared to already low cost Wal-Mart which reflects a growing number of Americans working in low wage jobs.

To put this in perspective, just look at the number of various stores in the United States:

dollar stores break down

Dollar General, Family Dollar, and Dollar Tree are all in the top 7 of stores in the United States.  In many cases, there are more dollar stores than certain gas stations:

dollargeneral_oldstore

Why are dollar stores doing so well in the United States?  They are doing well because they are tapping into two things:

-1.  Americans love to spend

-2.  Even those with little income (a growing number of people) love to spend what little they have

The number of Americans on food stamps is staggering:

Food-Stamps-Percent

Roughly 46 million Americans are receiving food stamps.  This is a large number of the population but also highlights the growth in dollar stores and their shift in serving food items versus other low cost trinkets.  They are tapping into a market that tends to grow when the economy does poorly.  And with low wage job growth soaring, they are continuing to do well.

A large part of their customers are coming in the form of Millennials that are struggling to make it in this new tough economy.  Dollar General’s stock is up 140 percent in the last five years.  Welcome to the dollar store recovery.

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4 Comments on this post

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  1. Aaron said:

    The weird thing about this is I’ve shopped at Dollar General before and their prices aren’t even that great. Comparable to Walmart at least, and maybe even more expensive (I haven’t bothered to do an in-depth comparison or anything). I’m not really sure why people would opt to shop there, but maybe my local Dollar Generals just suck.

    Dollar Tree on the other hand is actually neat because everything is actually $1. You still get what you pay for, but there’s something novel about knowing everything in the store is $1.

    October 31st, 2015 at 12:16 pm
  2. ebt.welfare.gov said:

    hillery will decree once elected all dollar stores will be changed to government stores where all welfare public assistance gov’t dependents will have exclusive access to these stores.come 2016 if you are not dependent on gov’t handouts u will not be allowed in these stores to shop

    October 31st, 2015 at 7:05 pm
  3. Publius said:

    In reality, compare item for item, dollar for dollar, ‘dollar stores’ are frequently NOT the most economical, often not economical at all. Dollar stores years ago used to sell remarkably discounted items that were obtained from loss leaders, odd lots and bankruptcy. Now they are merely cheap goods, often REALLY cheap (crummy) goods. Walmart beats them on virtually EVERY single item. Soap, soup, saran wrap, all can be obtained at a Walmart for UNDER a dollar, when at a ‘Dollar Store,’ it is a FULL dollar. There are a few good deals, but become price wise and don’t assume a dollar store is your best buy.

    November 4th, 2015 at 10:04 am
  4. Illuminati said:

    I thought this article was about REAL dollar stores…Dollar Tree. I haven’t gone into a DG or FD in years because Walmart is cheaper. Years ago I use to because they were actually cheap. Because of that I now only frequent the Dollar Tree. On a few of the items, it’s hit and miss. A quick visit for some foil, tooth brush or a birthday card is fine. For products you want great quality of then you visit Walmart/Target.

    November 29th, 2015 at 11:24 am

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