The “Dollar” retail chains are experiencing a significant growth spurt at the same time that other bricks-and-mortar chains serving higher-income shoppers are struggling. Why is this happening?
Some point to the unemployment that resulted from the covid quarantines. Those with reduced income move down the consumption ladder and find themselves in the aisles of a Dollar General or Five Below.
I am sure that that is part of what is happening. However, it has long been my contention that the “Dollar” retailers are the one bricks-and-mortar sector immune to e-commerce competition. The “Dollar” retail shopper lacks the two things essential to digital commerce: Access to the Internet and a line of credit.
The changes wrought by the Internet and covid are showing up in the number of this year’s new store openings. Consider this headline from CNN Business writer Nathaniel Meyersohn: “Nearly 1 in 3 new stores opening in the US is a Dollar General.” He writes: “Three dollar store chains will make up almost half of all the new stores opening up in the United States this year, a reflection of the dollar store sector’s outsized growth in the retail industry.”
Of the four major “Dollar” chains, Dollar General is by far the most impressive in terms of the number of new openings. With its 1035 new stores, it is opening more than the other three combined. Here is a breakout of new store openings for the top four “Dollar” chains:
Dollar General 1035
Dollar Tree 393
Family Dollar 198
Five Below 158
On the other hand, it is Five Below that shows the most growth in new store openings as a percentage of its current store-count. Five Below has 1000 stores, so the 158 new stores are 15.8% of its existing inventory. Outpacing Dollar General, whose 1035 stores is 6.3% of its current 16,278 store count.
It looks like 2021 may be the beginning of a very long runway for Dollar General, Five Below and the entire “Dollar” sector.