A Fistful of Dollar Stores
Dollar stores are expanding rapidly, with several discount retail chains opening new locations across the US.
Two of the most ubiquitous dollar store chains, Dollar Tree (DLTR) and Dollar General (DG), expect to open a combined 1,300 stores by the end of January. Meanwhile, TJX Company (TJX) chains such as TJ Maxx and Marshalls, as well as five-dollar store Five Below (FIVE), have each opened over 100 stores in 2022.
Thriving in Rural America
To compete against retailers like Walmart (WMT) or Target (TGT), these discount chains have targeted areas that are too sparsely populated for superstores. Rural locations don’t drive enough foot traffic for a company like Walmart to justify opening a new location. But for a company like Dollar General, it’s a perfect fit.
Dollar stores are able to thrive in these remote locations by bringing national buying power to markets that also have a low cost of labor and operations. At the same time, dollar stores bring value, convenience, and, most importantly, low prices to customers in remote areas.
A Race to the Bottom
Over the past two years, high inflation has caused consumers to be more cost-conscious as prices have risen for consumer staples like food and gas.
For millennial and Gen Z households in particular, saving money is a top priority. Both of these demographics have also shown a preference for saving on cheaper retail and household goods so that they can still splurge on experience-based purchases. This is yet another reason why dollar stores should continue to thrive over the coming years.
So if you live in a remote area and a mere trip to the grocery store feels like a trek, don’t fret. A dollar store might be coming to your area before you know it.
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