News

Dollar stores are trendy

December 4, 2011

Dollar stores are now part of the national shopping habit. As of mid-year 2011, the combined store count of the four major dollar store chains — Dollar General, Dollar Tree, Family Dollar, and 99 Cents Only — has surpassed that of the three biggest national drugstore chains — Walgreens, CVS, and Rite Aid — according to a new study released by Colliers International.

The white paper, "Dollar Days: How Dollar Stores are Growing in a Weak Economy," notes that the rapid expansion of this segment is part of the larger lesson learned by retailers during the recent recession: Consumers are looking for value.

"The rapid evaporation of wealth (both real and perceived), has profoundly changed the way Americans shop and how they define value," Ann Natunewicz, national manager of U.S. Retail Research for Colliers International, said in a press release. "Dollar stores now serve a larger consumer base, which is fueling unprecedented growth in dollar store leasing and a significant shift in the types of retail space they take."

Dollar General, Dollar Tree, Family Dollar, and 99 Cents Only stores combined operate about 21,500 locations in the United States — more than the combined stores of the three biggest drugstore chains. Typical dollar stores occupy an average footprint of 7,000 to 10,000 square feet, although some newer prototypes exceed 20,000 square feet.

Dollar stores' strong earnings and aggressive store expansion/remodel programs have made them extremely popular with landlords and property investors, according to the study.

"Dollar stores are big business now," Natunewicz said. "Their product selection and price points compete favorably with the big box stores. While the dollar stores are moving into more desirable locations, they are generally able to maintain aggressive deal terms."

Read more about customer behavior.