Dollar Stores Converge Traditional Grocer y Through New Stores, Increased Shopping

Dollar stores continue to be the fastest growing retail channel today, both in terms of the number of new stores and the number of shopping visits The deep discount sector is also the fastest growing retail channel for food purchases, with an 89 7 percent increase between 2008 and 2020, according to the American Public Health Association

The sector is focused on growing grocery volume through increased store count and shopper visit frequency, with Dollar General adding more than 1,000 net new stores each of the last four years and Dollar Tree and Family Dollar averaging more than 100 each per year during the same period

New research from ChaseDesign, a category growth design firm, provides insight into how and why dollar stores are capturing a larger portion of shoppers’ grocer y spend and what that means for retailers of all channels and brand marketers

Grocer y is now the top categor y shopped in the sector, according to the 2023 ChaseDesign Dollar Store Channel Sur vey, followed by personal care and home goods While food and related categories are the most shopped at dollar stores, trips to these locations are most often fill-ins for immediate need and not

primary stock-up shops

“Where people buy their groceries today is evolving quickly,” said Joe Lampertius, president of ChaseDesign “Dollar stores are getting an increasing amount of their sales from packaged, fresh and frozen foods and they’re capturing those revenues from traditional retailers like supermarkets and mass merchants This emerging competition needs to be top of mind for those retailers as they strategize how, when and where to engage their shoppers ”

Lampertius said there is mainstreaming of dollar stores taking place In fact, shoppers say national brands are already about half of their purchases and they want more frozen foods (51 percent), more national brands (47 percent) and more beauty and personal care brands (35 percent) Rather than see these stores as a no-frills alternative to larger grocery stores, shoppers are looking for them to resemble their larger rivals more closely

“A key challenge retailers in this space need to overcome is the way their stores are organized and how categories are presented, as many customers find the experience challenging to navigate In fact, nearly three-quarters of respondents mentioned lack of organization, navigation and clutter as a challenge to their experience at dollar stores,” said Lampertius

Additionally, the digital experience of dollar stores is seen as less central to the shopping experience A majority of shoppers never even use dollar store retailer shopping apps, nor do they order products online, which is quite different from the mainstream grocer y and mass channels

This is a clear area of opportunity for the major players in this channel

Other key findings from the 2023 ChaseDesign Dollar Store Channel Survey include:

• Dollar stores shoppers want more fresh and frozen foods (51 percent), national brands (47 percent) and beauty and personal care brands (35 percent)

• Dollar stores are often part of a repertoire when it comes to food purchases

• Seventy-two percent mentioned lack of organization, navigation and clutter/cleanliness as the top reasons they find shopping at dollar stores a challenging experience

• The most frequent shopping trips to dollar stores are fill-in and immediate need

• Typical transaction in the dollar store channel is $25 or less

• Majority of shoppers never use dollar store retailers’ apps: 15 to 22 percent (20 percent, average) didn’t know the stores had an app; 35 to 70 percent (46 percent, average) never use their website (browser)

• Those shoppers using dollar store apps and/or websites are checking sales and specials, looking up product availability and price, using coupons or finding new products

• Shoppers say Dollar Tree is the easiest store to find items, while Dollar General is the easiest retailer to find items online and in the app

• Half of the shoppers sur veyed never order online with these retailers If they do, they’re picking up in store (36 percent)

• The top priorities for shoppers using a retailer’s app and website include having good categorization, ease of search and smooth operation of technology Yet 25 percent mentioned issues with finding products and product information, 24 percent mentioned bad overall experience and 23 percent mentioned technology problems like issues with searchability and glitches

ChaseDesign fielded an online survey in March 2023 through its proprietar y research platform, mPulse, amongst 1,000 consumers between the ages of 25 to 54 Respondents were screened to be the primary or secondary shopper in their households GN