Table of Contents
Scope and Themes
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- What you need to know
- Definition
- Data sources
- Sales data
- Consumer survey data
- Advertising Creative
- Abbreviations and terms
Executive Summary
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- Recession drives frugal consumers into dollar stores
- Dollar General and Family Dollar dominate the channel
- Channel use on the rise
- Incidence of buying food on the rise but cleaning products still in high demand
- Bargains, convenient locations and time savings all drive visitation
- Frequent shoppers driven into the channel by the “thrill of the hunt”
- Blacks more likely to shop channel
Insights and Opportunities
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- Surveys and social networking efforts can invite loyalty that encourages new and infrequent customers to continue shopping dollar stores after the recession
- Emphasize bargains on name brand products to appeal to a broad spectrum of consumers, including the middle class
- Create a fun, clean, wholesome customer experience
- Offer more fresh food to appeal to Baby Boomers
Inspire Insights
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- Saving Your Soul
Market Size and Forecast
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- Key points
- Dollar store sales growing, despite the recession
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- Figure 1: Total U.S. retail sales by dollar stores, in current terms, 2004-13
- Figure 2: Total U.S. retail sales by dollar stores, in inflation-adjusted terms, 2004-13
Competitive Context
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- Supercenters compete directly with dollar stores for value-oriented customers
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- Figure 3: Proportion of households purchasing CPGs, by channel, 2007 and 2008
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- Figure 4: Share of CPG sales, by channel type, 2002-08
Market Drivers
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- Key points
- Most customers are from low income brackets, but incidence of affluents shopping at dollar stores is on the rise
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- Figure 5: Number of households that shopped at Dollar General or Family Dollar in past four weeks, by household income, 2008
- Blacks and Hispanics heavy users; low incomes drive demand
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- Figure 6: Median household income, by race of householder, 1997-2007
- Low level of consumer confidence driving dollar store sales
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- Figure 7: Consumer sentiment index, 2001-09
- Increase in numbers of dollar stores helps to drive sales growth
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- Figure 8: Number of stores operated by leading companies at year’s end, 2004-08
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- Figure 9: Reasons for not shopping more frequently at dollar stores, by age, April 2009
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- Figure 10: Reasons for not shopping more frequently at dollar stores, by age, April 2009
- Perception of low quality and a preference for other stores are primary barriers to use
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- Figure 11: Reasons for not shopping more frequently at dollar stores, by age, April 2009
Leading Companies and Brand Share
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- Key points
- Companies with the classic dollar store concept are growing in recession while other discount retailers struggle
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- Figure 12: Dollar store sales, by retailer, 2002-08
- Most stores report sales of $2 million per year or less
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- Figure 13: Dollar store sales, numbers and square footage, top eight brands, 2008
- Dollar General
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- Figure 14: Category sales at Dollar General, 2006-08
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- Figure 15: National map of Dollar General locations, 2009
- Family Dollar
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- Figure 16: Category sales at Family Dollar General, 2006-08
- Figure 17: National map of Family Dollar locations, 2009
- Dollar Tree
- Fred’s Inc.
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- Figure 18: National map of Fred’s Inc. company-owned and franchised store locations, 2008
- 99¢ Only Stores
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- Figure 19: Category sales at 99¢ Only Stores, 2006-08
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- Figure 20: Map of 99¢ Only Stores locations, 2008
- Big Lots
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- Figure 21: Category sales at Big Lots, 2007 and 2008
- Duckwall-ALCO
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- Figure 22: Category sales at Duckwall-ALCO, 2008 and 2009
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- Figure 23: Map of Duckwall-ALCO locations, 2008
Innovation and Innovators
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- Dollar stores for the affluent: 99¢ Only Stores on Wilshire Boulevard
- Redesigning the customer experience: Family Dollar’s “Concept Renewal”
- Moving from single to multi-price point retailing: The Dollar Tree “Oops” and Deal$ models
Advertising and Promotion
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- Many use prices more than ads and gimmicks to attract customers
- Some companies making greater use of the internet
- Dollar General and Family Dollar both partner with Kimberly-Clark on the Room a day Giveaway
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- Figure 24: Dollar General’s Kimberly-Clark and The View Room a Day Giveaway, 2009
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- Figure 25: Family Dollar and The View Room a Day Giveaway and website promotion, 2009
- Fred’s pitches customers with a Caribbean theme
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- Figure 26: Fred’s “How low can you go?” ad, 2008
- Big Lots appeals directly to value-conscious women shoppers
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- Figure 27: Big Lots getting bags of stuff for less than $20, 2009
Channel Usage
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- Key points
- Incidence of visit to market leaders rose slightly between 2007 and 2008, as the recession gripped the nation
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- Figure 28: Trended incidence of Dollar General and Family Dollar visits in past four weeks, 2005-08
- Most respondents reported shopping at dollar stores once per month or more
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- Figure 29: Demographic comparison of dollar store use, April 2009
- Food channels shopped more frequently, especially in recession
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- Figure 30: Incidence and frequency of use for food channels, by age, April 2009
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- Figure 31: Incidence and frequency of channel use at stores that do not specialize in food, by age, April 2009
Category Purchase
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- Key points
- Frequent shoppers are driving sales growth; more likely to shop across categories
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- Figure 32: Incidence of category purchase at dollar stores, April 2009
- 35-44 year olds more likely to report purchase in popular categories
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- Figure 33: Incidence of purchase of personal care, kitchen cleaning and kitchen supplies at dollar stores, by age, April 2009
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- Figure 34: Incidence of purchase of food and other home supplies at dollar stores, by age, April 2009
Reasons for Shopping at Dollar Stores
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- Key points
- Savings and convenience are the primary drivers of use
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- Figure 35: Reasons for shopping dollar store channel, by age, April 2009
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- Figure 36: Reasons for shopping dollar store channel, by income, April 2009
Response to Recessionary Pressures
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- Key points
- Dollar store shoppers, especially frequent shoppers, more likely to report changing in response to recession
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- Figure 37: Effect of recession on shopping behavior, by frequency of dollar store visit, April 2009
General Shopping Attitudes
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- Key points
- Frequent dollar store users enjoy shopping and often shop across channels
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- Figure 38: Attitudes toward shopping, by frequency of dollar store use, April 2009
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- Figure 39: Shopping enjoyment, by dollar store shopper, October 2007-December 2008
- Figure 40: Shopping with family, by dollar store shopper, October 2007-December 2008
- Young adults more likely to shop for fun, shop across channels and shop with family
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- Figure 41: Attitudes towards shopping, by age, April 2009
Race and Ethnicity
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- Key points
- Blacks and Hispanics are a key element of the target market
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- Figure 42: Incidence and frequency of dollar store use, by race/ethnicity, April 2009
- Spanish speakers have lower incomes, greater need for dollar stores
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- Figure 43: Income distribution of Spanish-speaking and English-speaking Hispanics in the U.S., October 2007-December 2008
- Blacks are more likely to purchase consumables at dollar stores when compared with other race/ethnicity segments
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- Figure 44: Incidence of category purchase, by race/ethnicity, April 2009
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- Figure 45: Incidence of category purchase, by race/ethnicity, April 2009
- Affinity for shopping among blacks and Hispanics drives use of dollar stores
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- Figure 46: Attitudes towards shopping, by race/ethnicity, April 2009
- Blacks more likely to choose channels based on both price and convenience
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- Figure 47: Incidence and frequency of shopping within channels that specialize in food, by race/ethnicity, April 2009
- Blacks and Hispanics somewhat more likely to report changing behavior in response to recessionary pressures
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- Figure 48: Influence of the economy on shopping, eating and transportation habits as compared to last year, by race/ethnicity, April 2009
Cluster Analysis
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- Dollar Store Devotees (38%)
- Infrequent Shoppers (36%)
- Quality Seekers (25%)
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- Figure 49: Dollar store shopper clusters, April 2009
- Figure 50: Incidence and frequency of use, by dollar store shopper clusters, April 2009
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- Figure 51: Incidence of purchase of items at dollar stores, by dollar store shopper clusters, April 2009
- Figure 52: Reasons for shopping dollar channel, by dollar store shopper clusters, April 2009
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- Figure 53: Attitudes towards shopping, by dollar store shopper clusters, April 2009
- Figure 54: Reasons to increase the amount of shopping at dollar stores, by dollar store shopper clusters, April 2009
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- Figure 55: Influence of the economy on shopping, eating and transportation habits as compared to last year, by dollar store shopper clusters, April 2009
- Figure 56: Dollar store shopper clusters, by gender, April 2009
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- Figure 57: Dollar store shopper clusters, by age, April 2009
- Figure 58: Dollar store shopper clusters, by income, April 2009
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- Figure 59: Dollar store shopper clusters, by race, April 2009
- Figure 60: Dollar store shopper clusters, by Hispanic origin, April 2009
Custom Consumer Groups
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- Rural families who live simple lives and enjoy outdoor activities are among the most frequent shoppers at leading companies
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- Figure 61: Custom consumer groups with the highest incidence of use of dollar stores, by custom consumer group, October 2007-December 2008
Appendix: Additional Age Comparisons
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- Figure 62: Incidence of Dollar General and Family Dollar use in the past four weeks, by age, October 2007-December 2008
- Figure 63: Number of visits to Dollar General in the past four weeks, by age, October 2007-December 2008
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- Figure 64: Number of visits to Family Dollar in the past four weeks, by age, October 2007-December 2008
- Figure 65: Incidence and frequency of dollar store use, by age, April 2009
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- Figure 66: Influence of the economy on shopping, eating and transportation habits as compared to last year, by age, April 2009
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Appendix: Additional Income Comparisons
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- Figure 67: Incidence of purchase of personal care and cleaning items at dollar stores, by income, April 2009
- Figure 68: Incidence of purchase of food and other home supplies at dollar stores, by income, April 2009
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- Figure 69: Incidence and frequency of use of channels that specialize in food, by income, April 2009
- Figure 70: Incidence and frequency of use of channels that do not specialize in food, by income, April 2009
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- Figure 71: Incidence of shopping at Dollar General or Family Dollar in the past four weeks, by income, October 2007-December 2008
- Figure 72: Number of visits to Dollar General in the past four weeks, by income, October 2007-December 2008
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- Figure 73: Number of visits to Family Dollar in the past four weeks, by income, October 2007-December 2008
- Figure 74: Incidence and frequency of dollar store use, by income, April 2009
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- Figure 75: Influence of the economy on shopping, eating and transportation habits as compared to last year, by income, April 2009
- Figure 76: Attitudes towards shopping, by income, April 2009
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Appendix: Additional Race/Ethnicity Comparisons
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- Figure 77: Incidence and frequency of use of channels that specialize in non-food products, by race/ethnicity, April 2009
- Figure 78: Reasons for shopping dollar channel, by race/ethnicity, April 2009
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- Figure 79: Attitudes towards shopping, by race/ethnicity, April 2009
- Figure 80: Incidence of Dollar General and Family Dollar use in the past four weeks, by race/ethnicity, October 2007-December 2008
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- Figure 81: Number of visits to Dollar General in the past four weeks, by race/ethnicity, October 2007-December 2008
- Figure 82: Number of visits to Family Dollar in the past four weeks, by race/ethnicity, October 2007-December 2008
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- Figure 83: Reasons for not shopping more frequently at dollar stores, by race/ethnicity, April 2009
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Appendix: Trade Associations
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