Dollar Chains’ Foot Traffic Beating Grocery Stores

As consumers continue to hunt for good prices, many have turned to discount and dollar chains of late, which the first half of 2023’s results prove. Several of the biggest chains in the category posted strong numbers, according to a recent report by Placer.ai. 

In fact, this segment—led by Dollar Tree, Family Dollar, Ollie’s, Bargain Outlet and Five Below–has performed better than grocery stores and superstores, according to the retailers’ positive year-over-year foot traffic. Dollar General, the country’s largest dollar store, experienced some small YoY visit gaps, probably due to a strong 2022 but the chain’s July 2023 visits still held above its already strong January 2022 baseline. Some of Dollar General’s growth was due to the company’s expansion as it opened 1,039 new stores last year.

Others in this group also expanded their brick-and-mortar buildings, including Dollar Tree, which owns Dollar General, Ollie’s Bargain Outlet and Five Below.

But if you think the same demographic visits all these discounters, you’re wrong. The profile reflects a variety of customers since the chains offer slightly different merchandise. Family Dollar was popular with the least affluent demographic in the second quarter of this year. The chain’s median household income was just $50.2K, 28% below the national baseline. Dollar General’s audience had a captured market median household income of $55.8K, 20% below the nationwide average. Ollie’s Bargain Outlet and Dollar Tree appealed to a bit more comfortable customer base. Five Below attracted consumers with the highest median household income, just 6% under the national median. And this was true in many states, too, rather than just one region, as the patterns held in Pennsylvania, Texas and Florida, for example.

And how often are they visiting? Besides appealing to different consumers, these discount and dollar chains also revealed different visitor traffic patterns. With more than 20,000 stores, Dollar General consumers shopped the most often with 29.2% visiting the chain at least three times in this year’s second quarter. Dollar Tree and Family Dollar shoppers had more repeat visitors rather than long visits when they came. Five Below and Ollie’s Bargain saw visitors come less often but stay in stores for longer periods when they did.

It is also a mistake to assume these stores are offering similar merchandise. Dollar General and Family Dollar have become destinations for families seeking basics at the lowest possible prices. Both chains have moved beyond the $1 price point to broaden their offerings and both also have begun to stock a wider selection of grocery merchandise, including some fresh produce. The two chains also stock private-label products. Dollar Tree remains more of the traditional dollar store with most merchandise priced for $1.25 but it also has made a push into grocery goods and some with higher prices.

Ollie’s Bargain Outlet and Five Below offer some affordable “luxuries,” with Five Below carrying recreational items like toys, candy and party supplies. Ollie’s Bargain Outlet encourages shoppers to “get good stuff cheap” and stocks name-brand, high quality items from patio furniture to electronics and pet supplies. It also shifts its inventory around. Overall, shoppers visit these two chains less often than others but spend more time browsing the aisles when they head in, what’s termed recreational shopping.

The overall outlook for these five chains is expected to continue to fare well, even as inflation slows since they no longer carry just basics but some affordable splurges, which seems an oxymoron but in the case of these consumers some goods offer a bit of an indulgence but still not an outrageously expensive indulge.