A Coresight Research report has found that more than 1 in 5 consumers buy groceries at dollar stores.
“If [Dollar General and Dollar Tree] continue to improve the quality of their fresh food while maintaining the low prices associated with their brands, there is a high chance it will bolster their value proposition with their existing consumer base and also pull in new customers from higher-priced retailers,” the report said.
The cost of food continues to skyrocket leading consumers to find ways to save money on their grocery bills. This has also led to the record sales for store brands in 2022.
In the past year, food prices have risen 10%: Eggs are up 60%, the price of butter has increased 31% and lettuce is up 25%. Dollar stores are meeting inflation-weary customers where they’re at, often in rural locations, and expanding the number of its stores at a strong pace.
Coresight’s report cited how Dollar General and Dollar Tree have steadily increased their popularity among grocery shoppers in the past few years. The expansion of the sector is also rooted in structural changes in U.S. shopping habits according to John Mercer, head of global research at Coresight. Mercer said surveys have shown that members of the millennial and Gen Z generations are more price sensitive. These groups seek savings on retail and household goods in favor of spending more on services and experience-based purchases, he said.
The growth of dollar stores has been significant over the past two decades. Dollar General now has some 18,800 stores across the U.S., compared with 5,000 in 2001, according to Coresight. Dollar Tree acquired Family Dollar Stores 8 years ago and has since added more than 2,400 locations for a total of more than 16,000.