Declining mall foot traffic and competition from direct-to-consumer brands and private-label offerings have hurt mid-tier merchants like Toys “R” Us and Sears. But dollar stores are flourishing.
Today, nearly 30,000 dollar stores exist nationwide, exceeding Walmart and McDonald's combined. This is up from 20,000 locations in 2011, according to the Institute for Local Self-Reliance (ILSR).
Last year, Dollar General opened 900 stores, while Dollar Tree (which includes Family Dollar chains) opened 276, per November 2018 data from Coresight Research.
In 2019, Dollar Tree will renovate a minimum of 1,000 Family Dollar stores and open an additional 550 locations. Dollar Tree's new stores will be located in predominantly suburban areas, while Family Dollar stores will proliferate in more urban locations.
Meanwhile, Dollar General plans to open roughly 975 new locations in 2019, surpassing the 900 stores they launched in 2018. The company’s strategy focuses on its location penetration into lower-income cities and rural towns.
Today, most Dollar General stores exist in places with populations of fewer than 20,000 residents, miles away from grocery stores or big-box retailers. Dollar General executives also publicly described their core customers as households making less than $35,000, but estimated that nearly three-quarters of the US population live within five miles of one of their stores.
Even in today's growing economy, people still exhibit recession-influenced shopping tendencies. According to eMarketer’s retail analyst, Andrew Lipsman, “consumer confidence is actually at a high right now, but since the recession, people have developed and internalized a lot of bargain-shopping behaviors that aren’t going away—at least for certain types of goods.”
Indeed, households with income of $20,000 to $39,000 and those with $100,000-plus income account for equal shares of dollar store consumers (21%), according to an Inmar study from July 2018.