Dollar stores attracting even high-income consumers

by Staff
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ORLANDO, FLA. — The recession has led to increased consumer spending among all income levels at "dollar stores" with high income shoppers spending 18% more at dollar stores in the second half of 2008 compared with the same period of the previous year, according to The Nielsen Co.

"The troubled economy and rising costs in health care, education and food have caused everyone — even those with high incomes — to rethink where they purchase basic household goods," said Jeff Gregori, vice-president of retail services for Nielsen. "Five years ago, shoppers weren’t sure what they would find in a dollar store. Today, dollar stores are delivering more consistent selection and value, and consumers are shopping dollar stores more regularly to fulfill their basic CPG needs."

Nielsen estimates 65 million U.S. consumers shopped at dollar stores in 2008. Despite the increase in spending at such stores among high- and middle-income shoppers, low-income shoppers are still the primary dollar store customers.

Forty-five per cent of dollar store sales are from low annual household incomes (less than $30,000,000), 47% come from middle income households ($30,000,000 to $99,900,000) and only 8% come from high income (more than $100,000,000) shoppers. The most loyal dollar store customers are those with low incomes and who live in small towns, rural areas or urban centers.

"With more shoppers having positive experiences at dollar stores, there is a significant opportunity for dollar stores and C.P.G. manufacturers to build loyalty and expand into new product categories, such as food and beverages and select health and beauty care," Mr. Gregori said. "There is also a potential growth opportunity in exploring dollar store private label offerings in both edible and non-edible products. The challenge for dollar stores and CPG manufacturers is to get the product mix right to meet the needs of their traditional customers as well as new customers with higher incomes."

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