Table of Contents
Overview
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- What you need to know
- Definition
Executive Summary
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- The issues
- General merchandise stores ringing up billions
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- Figure 1: Total US sales and fan chart forecast of other general merchandise stores*, at current prices, 2011-21
- Running a profitable e-commerce operation is fraught with challenges
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- Figure 2: Attitudes toward online shopping at dollar stores, by generation, September 2016
- Lingering perception issues persist
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- Figure 3: Reasons for not shopping at dollar stores, September 2016
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- Figure 4: Openness to shopping at dollar stores, September 2016
- The opportunities
- Not just for low income shoppers
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- Figure 5: Changes in shopping the channel, by household income, September 2016
- Go beyond price; from transactions to experiences
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- Figure 6: Select shopping behaviors and attitudes regarding dollar stores, September 2016
- Build up grocery
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- Figure 7: Attitudes toward food and name brands, by core demographics, September 2016
- What it means
The Market – What You Need to Know
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- Poised for growth
- Affinity is high
- Store expansion leads to increased accessibility
Market Size and Forecast
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- Sector propels forward as Americans seek value
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- Figure 8: Total US sales and fan chart forecast of other general merchandise stores*, at current prices, 2011-21
- Figure 9: Revenues of other general merchandise stores*, at current prices, 2011-21
Market Perspective
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- Low share, high growth
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- Figure 10: Revenues of general merchandise stores*, by type, at current prices, 2011-16
- Staying relevant: easier said than done
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- Figure 11: Retailers shopped for household/personal care needs, August 2015
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- Figure 12: Planned retailer types for 2016 winter holiday shopping, by select demographics, May 2016
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- Figure 13: Grocery purchase incidence, August 2016
Market Factors
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- Younger generations more likely to favor dollar stores
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- Figure 14: Population by generation, 2011-21
- America continues to diversify
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- Figure 15: Population by race and Hispanic origin, 2011-21
- Figure 16: Generations, by race and Hispanic origin, 2016
- Value-centric mentality leads to changes in path to purchase
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- Figure 17: Select attitudes toward shopping and spending, January 2016
- Rising wages could boost the channel
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- Figure 18: Median household income, in inflation-adjusted dollars, 2004-14
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- Figure 19: Household income distribution by race and Hispanic origin of householder, 2014
- Macroeconomic factors continue to impact the market
- Low food costs good for consumers, but challenges retailers
- Consolidation rocks the industry; increases access
Key Players – What You Need to Know
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- Same basic proposition, but many business model executions
- Profitable e-commerce is a challenge
- Dollar stores must evolve for the modern day shopper
What’s Working?
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- Growth seen category-wide
- Dollar General overview
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- Figure 20: Dollar General storefront, greater Knoxville, Tennessee, November 2016
- Figure 21: Fiscal year revenues of Dollar General stores, at current prices, 2011-15
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- Figure 22: Percentage of net sales by major product group, Dollar General, at current prices, fiscal year 2015
- Figure 23: Dollar General store merchandise, greater Knoxville, Tennessee, November 2016
- Figure 24: Dollar General in-store hiring promotion, greater Knoxville, Tennessee, November 2016
- Dollar Tree Inc. (corporate) overview
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- Figure 25: Fiscal year revenues of Dollar Tree Inc., at current prices*, 2011-15
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- Figure 26: Percentage of net sales by major product group, Dollar Tree, fiscal 2015
- Figure 27: Dollar Tree exterior and interior, Chicago, Illinois, November 2016
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- Figure 28: Percentage of net sales by major product group, Family Dollar, fiscal 2012-14
- Figure 29: Family Dollar exterior and interior, Chicago, Illinois, November 2016
- 99 Cents Only overview
- Five Below overview
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- Figure 30: Fiscal year revenues of Five Below, at current prices, 2011-15
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- Figure 31: Percentage of net sales by major product group, Five Below, fiscal 2013-15
- Fred’s overview
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- Figure 32: Fiscal year revenues of Fred’s, at current prices, 2011-15
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- Figure 33: Percentage of net sales by major product group, Fred’s, fiscal 2013-15
What’s Struggling?
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- Keeping it “old school”; online operations not a main priority
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- Figure 34: E-commerce overview of leading dollar store retailers, November 2016
- Why is e-commerce not more of a priority?
- Hollar’s entry raises the stakes
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- Figure 35: Attitudes toward online shopping at dollar stores, by generation, September 2016
What’s Next?
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- Going beyond price
- Mobile solutions
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- Figure 36: Coupon and mobile phone usage, by age, September 2016
- In-store experiences
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- Figure 37: Select shopping behaviors and attitudes, September 2016
The Consumer – What You Need to Know
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- Dollar stores broaden appeal
- Appeal extends to the upper echelon
- Need to ramp up grocery
- “I’ve never thought about it”
Retailers Shopped
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- Three out of four shop at dollar stores
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- Figure 38: Retailers shopped, September 2016
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- Figure 39: Dollar Tree shopper profile, by select demographics, September 2016
- Figure 40: Dollar General shopper profile, by select demographics, September 2016
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- Figure 41: Family Dollar shopper profile, by select demographics, September 2016
Time Spent Shopping
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- Nearly half of shoppers spend 15 minutes or less at dollar stores
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- Figure 42: Time spent shopping, September 2016
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- Figure 43: Time spent shopping, by dollar store retailers shopped, September 2016
Changes in Shopping the Channel
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- Nearly one third shopping more often at dollar stores
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- Figure 44: Changes in shopping the channel, September 2016
- Dollar stores attracting more affluent customers
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- Figure 45: Changes in shopping the channel, by household income, September 2016
- Millennials flock to dollar stores
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- Figure 46: Changes in shopping the channel – Shopping more, by generation, September 2016
Shopping Frequency
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- Frequency needs to increase
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- Figure 47: Shopping frequency, September 2016
- Men and upper income 18-34s shop more frequently than all shoppers
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- Figure 48: Shopping frequency, by gender and age, September 2016
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- Figure 49: Shopping frequency, by age and household income, September 2016
- Dollar Tree shoppers are the least frequent dollar store shoppers in general
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- Figure 50: Shopping frequency, by retailers shopped, September 2016
Customer Segmentation – Engagement Levels
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- High Engagement (HE)
- Average Engagement (AE)
- Low Engagement (LE)
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- Figure 51: Consumer segmentation groups, by select demographics, September 2016
- High engagement observed at all listed retailers
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- Figure 52: Retailers shopped, by engagement level, September 2016
Categories Purchased
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- Consumables most popular items
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- Figure 53: Categories purchased, September 2016
- Trip drivers vary by race
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- Figure 54: Categories purchased, by race and Hispanic origin, September 2016
- Nearly half of shoppers buy at least four types of items
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- Figure 55: Repertoire of items purchased, September 2016
- Parents are buying at a higher rate
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- Figure 56: Repertoire of five or more items purchased, by select demographics, September 2016
- More needs, more time spent shopping
Food/Beverage Items Purchased
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- Pressuring convenience stores; top items sold for immediate consumption
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- Figure 57: Food/beverage items purchased at dollar stores, September 2016
- Two out of five food shoppers buy at least five items
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- Figure 58: Repertoire of food and beverage items purchased, September 2016
- Open to culinary suggestions
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- Figure 59: Attitudes toward technology and shopping, by key demographics, August 2016
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- Figure 60: Attitudes toward food and name brands, by key demographics, September 2016
Shopping Habits
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- Nearly four in 10 love to shop at dollar stores
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- Figure 61: Percentage who love shopping at dollar stores, by age and household income and engagement level, September 2016
- ‘Highly engaged’ with technology
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- Figure 62: Shopping habits at dollar stores, by level of engagement, September 2016
- Coupons are influential, but not a key trip driver
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- Figure 63: Food/beverage items purchased, by shopping habits, September 2016
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- Figure 64: Family Dollar Smart Coupons in-store signage, Chicago, Illinois, November 2016
- Figure 65: Dollar General in-store coupon signage, greater Knoxville, Tennessee, November 2016
- Convenience is a key driver
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- Figure 66: Tendency to shop by proximity, by area, September 2016
Attitudes toward Dollar Stores
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- Advantage – Shoppers see great ROI
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- Figure 67: Price-related attitudes toward dollar stores, by generation, September 2016
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- Figure 68: In-store signage featuring sales, Dollar General greater Knoxville, Tennessee (left) and Family Dollar in Chicago, Illinois (Right), November 2016
- Opportunities – Expanded foods and innovation
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- Figure 69: Consumer expectations of dollar stores, by adults 18-34 with $75K+ HHI, September 2016
- Threats – Consumer confusion and abandonment
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- Figure 70: Potential risks for dollar stores, by key demographics, September 2016
Reasons for Not Shopping at Dollar Stores
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- Perceptions of poor quality and selection top barriers to entry
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- Figure 71: Reasons for not shopping the channel, September 2016
- Now for some good news…
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- Figure 72: Openness to the channel, September 2016
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- Figure 73: Reasons for not shopping, by openness to the channel, September 2016
Appendix – Data Sources and Abbreviations
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- Data sources
- Sales data
- Fan chart forecast
- Consumer survey data
- Abbreviations and terms
- Abbreviations
- Terms
Appendix – Market
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- Figure 74: Revenues of general merchandise stores*, at inflation-adjusted prices, 2011-21
- Figure 75: Population by generation, 2011-21
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- Figure 76: Median household income, by race and Hispanic origin of householder, 2015
- Figure 77: Hispanic Labor Force Participation and Unemployment Rate, October 2016
- Figure 78: Black Labor Force Participation and Unemployment Rate, October 2016
- Figure 79: GDP change from previous period, Q1 2007-Q2 2016
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- Figure 80: Disposable Personal Income change from previous period, January 2007-August 2016
- Figure 81: Consumer confidence and unemployment, 2007-September 2016
- Figure 82: US gasoline and diesel retail prices, January 2007-September 2016
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Appendix – Key Players
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- Merchandise Definitions
- Dollar Tree
- Family Dollar
- Dollar General
- Five Below
- Fred’s
- Historical sales information
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- Figure 83: Fiscal year revenues of Dollar Tree, at current prices, 2012-15
- Figure 84: Fiscal year revenues of Family Dollar, at current prices, 2012-14
Appendix – Consumer
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- Figure 85: 99 Cents Only shopper profile, by select demographics, September 2016
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- Figure 86: Five Below shopper profile, by select demographics, September 2016
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- Figure 87: Fred’s shopper profile, by select demographics, September 2016
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- Figure 88: Time spent shopping at dollar stores, by repertoire of items purchased, September 2016
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- Figure 89: Dollar stores shopped, past three months, August 2011-16
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- Figure 90: Dollar stores purchased at, past four weeks, August 2011-16
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- Figure 91: Resources always referred to while shopping, by select stores, July 2015-August 2016
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- Figure 92: Resources sometimes referred to while shopping, by select stores, July 2015-August 2016
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