The Rise of the Dollar General Shopper

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Dollar General
, with its near 10,000 stores, has grown its business by marketing to those who are on the economic margins.  As a Dollar General buyer once explained to me; Dollar General consumers generally don’t have much in the way of disposable income.  As a result their shopper won’t buy a pair of gloves until the first day its gets really cold.  As a result, Dollar General stores do not put gloves on the shelf until the first day it gets freezing.  Their consumers simply do not have the money to anticipate the seasons.”

I thought of that as I read an article in The New York Times about consumers waiting longer to make seasonal purchases.  It seems that despite the heavy promotion for Back to School, consumers are simply not buying sweaters and other fall items ahead of the season.  Instead, they are buying only what  they need right now.  Here is how the article put it:

Retail executives say poorer people are not buying at the end of the month, suggesting they are heavily dependent on month-to-month paychecks. “With higher prices on gas, food and clothing, lower-end consumers just do not have much extra cash… In July shoppers went to air-conditioned malls to get out of the heat, but when they visited mid- and lower-end stores, they bought items to wear right away, not fall clothes. And they did not buy much of anything toward the end of the month.

That means, at least to me, that the type of consumer that the Dollar General buyer described has grown in numbers and is no longer limited to Dollar General.  He or she is still struggling from the recession and is hoarding whatever dollars they can. 

As a result, could we see a delay in purchases for Christmas in 2011?  It’s certainly a possibility as consumers, short of cash, bypass the early sales in order to spend what they have when they have it.

What can retailers do?  How about “lay away.”  That in my next posting.

 

2 thoughts

  1. Interesting article. Thank you for sharing. I agree that the ‘dollar consumer’ is making purchases bases on what I would call ‘desperate’ need, most likely foregoing another necessity that week infavor of that glove purchase.
    Regarding Back to School sales, I believe that this is a different consumer in many respects. Based upon last year’s results (2010) the Tesley group found that while clothing sales seemed to ‘lost’ for the season because consumers, mainly the kids themselves, did not buy in anticipation of their return to school. However the retails sales figures for the following fall months from retailers ranging from JCP to Walmart to Abercrombie, revealed that in fact they did buy seasonal in trend clothing. The kids waited to make their purchases until they could see what others were wearing, and shop with their friends. And last year it was jeggins that sold en masse.
    It is also true that the kid consumers did not want to buy sweaters in sweltering heat, but a simple solution to that has been discusses for years– the transitional wardrobe. A combo of the summer star styles with the cool versions of the fall/winter trends.
    Also, back to school sales are from the parents point of view based more on the necessities which mean they spend their discretionary dollars on schools supplies (check out the B2S section at Target– it’s huge and always packed), backpacks, and new shoes.

  2. While the article is correct, Dollar General has just as many high income shoppers as Kroger ( as defined by Spectra) in raw numbers. So Dg is a little more diverse than people think.
    Nice article.

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