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Dollar stores gaining on traditional supermarkets

Dollar stores gaining on traditional supermarkets

Dollar stores are well positioned to increase their share of the total U.S. grocery sales market, according to a report released earlier this month by Coresight Research. The report states that in the last three months, more than one in five consumers consistently reported visiting dollar stores to buy groceries.

In addition, Dollar General and Dollar Tree/Family Dollar rank in the top five retailers where consumers buy grocery products, often beating out Kroger-owned banners on a weekly basis.

Coresight said that although dollar stores only captured about 3.3% of total grocery sales last year, they have been focusing heavily on their grocery offering because of its potential to drive traffic. These efforts have helped drive double-digit growth in customer visits during the past three years.

The increasing presence of dollar stores, especially in rural areas, has also proven to be a key advantage. Dollar General has added an average of 1,018 new stores each year from November 2019 to November 2022, while Dollar Tree has added 211 net new locations and Family Dollar 104 net new stores.

The report concluded that one of the keys to success for dollar stores will be providing a large enough assortment of grocery staples to make it appealing as a grocery destination. It also concluded that the dollar chains pose a potential threat to supermarket chains in markets where they both have a presence, and to discount grocery retailers like Aldi, Lidl and Save-A-Lot.