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Inflation Drives Consumers to Gravitate to Dollar Stores

With inflation keeping running at its high level, the cost of everyday goods for Americans is way up. Consumers have to pay more at pumps, supermarkets, grocery stores, and just about everywhere. They are likely spending their monthly budget in a shorter time and have to try more saving methods to keep a balance.

Paychecks Are Running Out Faster

A survey of 3012 workers conducted by CouponBirds shows how many days after payday they spent their monthly budget. The in-depth survey uncovered that the average worker said they blow through their budget just 14 days after payday, leaving them either financially strapped or having to dip into savings to get them through the rest of the month.

The map above shows the specific research result in each state. It can be found that consumers in Maine and North Dakota spend their monthly budget after 28 days of payday which help them maintain a good balance. While consumers in New Mexico blew up their wad quickly and spend their monthly budget after 8 days of payday.

People Switch to Dollar Stores 

On Friday, the Labor Department said that the consumer-price index increased 8.6% in May from the same month a year ago, marking the highest reading since December 1981. U.S. consumer inflation in May reached its highest level in more than four decades as surging energy and food prices pushed prices higher. The cost of food and daily necessities is eating away at workers’ paychecks and more people turn to dollar stores to seek food and daily uses at a lower or affordable price. The popularity of dollar stores is continuing to rise. There are more than 32,000 dollar stores in the US and the most famous dollar store chains in the US are – Dollar General, Dollar Tree, and Family Dollar.

US Dollar Store Chains

The biggest dollar store chain in the US is Dollar General with 16,191 stores located across 44 states. Dollar Tree has 7,296 stores across 48 states, with the largest state-wide presence. While Family Dollar, which has been takeover by Dollar Tree in 2015, has 9,489 stores across 46 states. Although all these dollar store chains are spread over 40 states, the market share of these store chains in each state is not the same.

Market Share of Dollar Store Chains in Each State

The map above shows the reigning dollar store in each state. Dollar General dominates in 30 states, most of which are in the central and southern states. The top 3 states with the most number of Dollar General stores are Texas (1,543), Florida (906), and Georgia (889). Family Dollar outnumbers in 11 states of which 7 are in the western states. The top 3 states with the highest number of Family Dollar stores are Texas (1,243), Florida (730), and North Carolina (559). Dollar Tree only dominates in 8 states, of which three states are on the west coast.  The top three states with the most Dollar Tree stores are California (609), Texas (593), and Florida (540).

Dollar Stores Thrive in the Inflation 

Consumers are feeling the weight of inflation as prices for necessary goods continue to climb and are flocking to discount stores. The popularity of dollar stores has shown its strength in the face of inflation. Dollar General reported a net sales increase of 4.2 percent during the first quarter of 2022. Dollar Tree reported a net sales increase of 6.5% during the first fiscal quarter of 2022, which is higher than its general increase of 4.2%. And Family Dollar increased 2.8% compared to the first quarter of 2021.

Sales Increase of Dollar Stores in Q1 2022 

Dollar Stores’ Changes to Hit Inflation

The growing demand for discount or affordable products is a signal of the changing in shopping patterns. Dollar stores have witnessed the change and are expected to expand their market to boost sales.

Dollar General announced that it would open 1,100 U.S. locations in its fiscal 2022.  And Dollar Tree plans to open 400 Family Dollar and 190 Dollar Tree stores in 2022.

Dollar General also plans to add more $1 items as well as lower-priced products to its shelves to appeal to cash-strapped shoppers. Last year, Dollar Tree announced to raise prices on most products to $1.25. The sales growth of 6.5% in the first quarter of 2022 proved that the price hike doesn’t deter the shopping passion of customers. Even though the price of Dollar Tree is not $1 anymore, it is still lower than the similar goods in grocery stores or big department stores like Walmart.

Inflation is at a 40-year high. Consumers are now getting pressure from the rising price of their rent, fuel for their cars, food, and everything in their life. While inflation is hitting all retailers, the dollar stores that still try to keep their prices under or about 1 dollar appear to be the winner compared to those retailers that already raise their prices to hit inflation.

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