If investing in new locations is an indicator of success, then Dollar General, Dollar Tree, and Five Below are defying the economic angst that is so prevalent lately and growing.
I have always found these retailers fascinating because they target the shoppers most retailers ignore, households making less than $40,000 a year. I vividly recall a Dollar General buyer explaining their relationship with the consumer: “We sell winter gloves. However, we don’t put them out until the first day it is cold enough to need them. Why? Because their shoppers won’t buy the gloves until their hands are cold.”
Due to inflation and challenging economic conditions for many, consumers who once shopped in Walmart or Target are dropping down to the value retailers so their money can go further. In addition, the buyers for these retailers focus on products and retails that their customers need. Add in the cleanliness of the stores and ease of getting in and out, and you have a highly functioning retail concept.*
Here is the planned growth in 2023 for Five Below, Dollar General, and Dollar Tree.
Five Below plans to open 200 new stores this year. It will also remodel another 400. This growth is on top of the 150 new stores and 250 conversions in 2022 to the Five Beyond concept. The company currently operates 1357 stores.
Five Below is not alone in expanding its store counts. Rival Dollar General is opening 1050 new stores this year and remodeling another 2000. The company currently operates 18,774 stores.
Dollar Tree is said to be opening 600 stores in 2023 and renovating 1000. Dollar Tree currently operates 16,000 stores.
When I add up all those stores (existing and expected), it comes to 37,981 locations. To give you a sense of just how big that is, Walmart currently operates 4648 outlets. In other words, Five Below, Dollar General, and Dollar Tree have between them eight times as many stores as Walmart.
Are you selling to these stores? A better question is, are you making products appeal to their shoppers?
*I have always held that the demise of Kmart (are they dead yet?) resulted not from competition from Walmart but from Dollar General and Family Dollar.
