Dollar Stores More Than a 'No Frills Alternative' for Groceries

There’s tremendous momentum behind grocery shopping at dollar stores as consumers are not so much seeing them as a “no-frills alternative” to larger grocery stores, but as locations that resemble their larger rivals more closely.

Now, if these operators could just get organized.

A key challenge that retailers in this space need to overcome is the way their stores are organized and how categories are presented, according to a report by ChaseDesign.

“Many customers find the experience challenging to navigate,” Joe Lampertius, President of ChaseDesign said in a prepared statement. “In fact, nearly three-quarters of respondents mentioned lack of organization, navigation, and clutter as a challenge to their experience at dollar stores.”

Research also showed that these shoppers don’t use an app, half never order online and their typical transaction in the dollar store channel is $25 or less.

Shoppers say Dollar Tree is the easiest store to find items, while Dollar General is the easiest retailer to find items online and through the app.

“Where people buy their groceries today is evolving quickly,” Lampertius said.

“Dollar stores are getting an increasing amount of their sales from packaged, fresh, and frozen foods, and they’re capturing those revenues from traditional retailers like supermarkets and mass merchants. This emerging competition needs to be top of mind for those retailers as they strategize how, when, and where to engage their shoppers.”

The study showed that most dollar store shoppers frequent the stores for “fill-in” and “immediate” product needs.

Dollar stores continue to be the fastest growing retail channel today, both in terms of the number of new stores and the number of shopping visits, ChaseDesign said.

The deep discount sector is also the fastest-growing retail channel for food purchases, with an 89.7 percent increase between 2008-2020, according to the American Public Health Association.