Over 40% of New Stores Opening in the U.S. Are Dollar Stores
It may seem like there's already one everywhere you look. But shoppers should get ready for even more dollar stores to appear in their neck of the woods.
The three main dollar store brands — Dollar General, Dollar Tree and Family Dollar — have not only survived but thrived through the "retail apocalypse," a global pandemic and beyond. Dollar General opened 1,000 new stores last year and has 1,050 more in the works for 2021. Dollar Tree, which owns Family Dollar, added roughly 500 new dollar stores in 2020 and plans on opening 600 more this year.
Such growth would be impressive — and scary, frankly, for competing retailers — at any time. But the dollar store explosion has been happening while many other traditional retailers have been struggling mightily or experiencing very slow expansion.
Coresight Research, which tracks store openings and closures in the U.S., reported that roughly 3,300 stores of any kind opened in 2020, and an estimated 4,000 will open in 2021. That adds up to 7,300 new stores in two years — and 3,150 of them, or 43%, are dollar stores.
In 2020, analysts were expecting as many as 25,000 permanent store closures in the U.S., so it came as somewhat of a relief when "only" about 9,000 closed, per Coresight.
The flip side is that the dollar store business keeps humming along. Shoppers understandably turned to dollar stores en masse during the Great Recession, and the stores have been adding food and drink options to make them attractive one-stop-shopping alternatives to grocery stores or Walmart.
As more shoppers browse in dollar stores, the more likely they've been to question whether the "deals" are actually good deals. Quality is always questionable in discount stores. Careful shoppers have also complained the prices aren't that cheap (often way more than $1) — an issue that will only grow as global supply chain problems continue.
Other critics say that dollar stores are bad for the neighborhoods where they open, because they can nudge supermarkets and local shops to go out of business, and even that they prey on low-income shoppers in an era of rising inequality.
Regardless, there's little sign of the dollar store boom fading anytime soon. The three major chains currently operate nearly 33,000 store locations in North America (mostly in the U.S.), which is more than CVS, Walmart, Kroger, Rite Aid, Albertsons, Aldi, Target and Costco combined.
They're growing too, not just in terms of raw number of locations but in kinds of retail concepts. Dollar General launched a more "fun, on-trend" version of the dollar store called Popshelf last fall, and one analyst described it as the "best new concept" in retail he's seen in decades. Dollar Tree is trying out new Family Dollar and Dollar Tree combo stores operating side by side. These combo stores are open in 100 locations, with nearly all Dollar Tree items going for $1 or less and Family Dollar offering slightly higher priced goods.
Despite somewhat of a subpar second quarter and the strong likelihood of more supply chain difficulties and shipping price increases this year, the major dollar store companies say they are not shifting gears in terms of expansion. "The Company is reiterating its plans to execute 2,900 real estate projects in fiscal year 2021, including 1,050 new store openings, 1,750 store remodels, and 100 store relocations," Dollar General said in the press release for its second quarter earnings report last week.
Dollar Tree says it's been seeing "materially increased sales" at its new combo stores, which only launched in March, and that there's opportunity to open 3,000 of these stores "in rural markets alone."
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