The dollar store brick-and-mortar renaissance continues, as chains like Dollar General and Dollar Tree are enjoying a strong surge in new openings across the U.S., the Wall Street Journal reported.
Both chains will have opened a combined 1,300 new locations by the end of the fiscal year, continuing the momentum from 2021, when nearly half of the 3,600 new stores that opened nationwide were no-frills discount shops.
In addition, Five Below and TJX Co., the parent company of discount stores such as TJ Maxx, opened 100 new stores in 2022, the Journal said.
Many dollar stores serve rural locations that other retailers ignore and operate where costs of labor and operations are lower than other areas of the country, Piper Sandler analyst Peter Keith told the outlet.
“It’s about providing convenience and value to customers that live in more remote areas,” Keith told the Journal. “They really can outcompete the local grocer in a smaller market.”
While inflation has played a significant part in variety stores’ popularity, millennials and Gen Zers — predating the COVID pandemic — have sought lower prices for essential goods, including groceries, the outlet reported.
“We are aggressively expanding our offerings of protein, pizza, breakfast items and family sizes at price points [to] meet their budgets,” Michael Witynski, the CEO and president of Dollar Tree, told analysts in a November earnings call, Quartz reported.
Dollar General has nearly 19,000 outlets in the U.S., while Dollar Tree (which acquired Family Dollar in 2015) has about 16,000 locations, according to WSJ.
The growth of dollar stores doesn’t appear to be waning any time soon. Dollar General’s CEO Jeff Owen told investors earlier this year that the sector could add another 16,000 stores, the Journal reported.
— Ted Glanzer