Dollar Store Visits Quickly Rebound to Pre-COVID Levels With Likely Increased Demand

Recession where? Dollar stores have already returned to year-over-year visitor growth during the week of Aug. 3, according to a study by consumer tracker Placer.ai. Industry observers expect continued demand for the thrift stores as shoppers tighten their budgets.

Beginning the week of Aug. 3, visits to Dollar General increased to 22% compared to the same week last year and Family Dollar also noted a 5% increase in visits. The Five Below retail chain finally crept from negative year-over-year figures to a nearly 2% increase during the week of Aug. 3. Similarly, Dollar Tree outperformed the first week of August 2019 by almost 1%.

While an impressive rebound many retail sectors can’t currently claim, Dollar General was the clear leader, Placer.ai wrote. Dollar General was noted by Placer.ai as a “rising retail giant” as monthly visits also grew 17% in July 2020 compared to July 2019. July’s figure continued a gradual increase in year-over-year visits after a 14% and 13% growth in June and May respectively. Family Dollar, which was acquired by Dollar Tree in 2015, also reported an increase in monthly visitors, albeit only a 0.4% increase.

To be sure, dollar stores have been impacted by COVID-19. Visits in July to Five Below were down 2.9% year-over-year. Likewise, there were 2.7% less visits to Dollar Tree stores in July 2020 compared to July 2019. However, Placer.ai noted those decreases were significantly lower than Walmart’s 13% decline in year-over-year July visits.

Dollar stores will likely become a ”significant asset” for more shoppers as COVID-19′s economic uncertainty and tightened budgets lag through 2020 and possible 2021, Placer.ai wrote. With growing popularity, leasing opportunities are also heating up for the dollar store sector.

The Boulder Group president Randy Blankstein told Globe.St.com in late July, the dollar store sector is priced at a 73-basis point discount to the overall net lease retail market because of increased demand for value in response to the coronavirus. Investors saw the dollar store sector as a safer bet than its other traditional competitor—quick-service restaurants (QSR), Blankstein explained.

“A lot of the competition at that price point has been historically against QSR, and QSR doesn’t have as many new locations being built-in,” Blankstein said. “QSR’s problem at the moment is people don’t want smaller franchisees. They all want either corporately owned stores or the large franchisees.”