English: Typical Dollar Store, San Francisco

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The Dollar Store channel continues to grow and evolve.  Even in a down economy, the larger Dollar Store chains continue to grow revenue, post profits and open new stores expanding their customer base.  Many Dollar Store chains have modified their product selection to include more national brands (and for the larger chains, their own store brands) and a larger variety of food and beverage products.  The larger chains are also now taking advantage of e-commerce capabilities on their websites to grow sales.

The combination of an expansion of products offered, more convenient locations, a manageable size and low prices, have positioned Dollar Stores as a threat to other types of retailers (e.g., c-stores, drug stores, mass merchandisers, warehouse clubs) to obtain greater share of the consumer’s dollar.  The challenge for manufacturers of consumer goods is how to best position themselves to take advantage of this opportunity. 

Background

This summary of study highlights represents Wave V of the Dollar Store Shopper Close-Up Study.  This bi-annual in-store shopper insights research program identifies consumer shopping behavior, attitudes and decision-making patterns in Dollar Stores.

The learning from this research program can serve as a powerful tool for helping manufacturers develop and/or improve strategies for doing business within the environment of this dynamic, growing channel. 

This research was conducted via in-store intercept interviews with adult consumers as they were exiting the Dollar Store, immediately after they finished paying for their purchases.  The interview included:

  • A general section covering shopper background information, attitudinal measures, general shopping trip characteristics and items purchased during that store visit (market basket).
  • A section covering in-depth information about the decision-making process for specific items purchased.

Interviewing locations included a panel of chain and independent dollar store outlets representing the four geographic regions.

The general report focuses on popular product categories in Dollar Stores: CSDs, other ready to drink beverages, snack food, candy/gum/mints, beauty care, health and personal care, household cleaners/chemicals and household paper & plastic products.  Where relevant, findings are also analyzed by:

  • Store Type: Extreme Value (multiple price points) vs. Single Price ($1 or 99 cents),
  • Shopper Profile (Household Income, Age of Shopper) and
  • Dollar Store Shopping Frequency (Heavy, Moderate, Light).

Who is the Dollar Store Shopper?

The Dollar Store customer base is changing:

  • Shoppers are skewing older,
  • Household income has increased,
  • Female shoppers are becoming more dominant,
  • Ethnic diversity has decreased. 

How have their shopping habits changed?

Many shoppers have increased their visits to Dollar Stores over the past year.  Concurrently, they have decreased visits to other channels (e.g., c-stores, drug stores and warehouse clubs).

What categories are most likely to be purchased in Dollar Stores?

Product categories most likely to be purchased in Dollar Stores include: household cleaning products/chemicals, greeting cards, gift wrap and bags, household paper and plastic products, snack food and candy, gum and mints.  Reported purchasing has increased for these (and many other) categories.

What are the key factors in the decision to visit a Dollar Store?

Good value for the money is the most prominent factor when choosing a Dollar Store.  Other key factors include:  convenient location, clean/well maintained, good quality products, good customer service and always has products wanted in stock.

The importance of value has increased while many other considerations have become less important.

When is the decision made to buy a type/brand of product?

For many key dollar store categories, the decision to buy is made prior to coming to the store.  However, food categories tend to have higher levels of impulse buying versus others.

Brand planning is high for household cleaning products, CSDs and personal/healthcare items.  In-store brand decision making is more salient for food, paper & plastic and beauty products.

Other key areas addressed in the General Report of Findings include:

  • What type of shopper visits Dollar Stores most frequently?
  • What effect has the poor economy had on shopping in Dollar Stores and what does it suggest for the future?
  • Why do shoppers choose Dollar Stores over other trade channels?
  • What is in the Dollar Store market basket?  What is the total amount spent?  How have these indicators changed over the past two years?
  • What is the purchase decision hierarchy that shoppers use to make their product choices?
  • What is the primary reason for purchase?
  • What is the impact of in-store and out-of-store purchase influencers?

For more information about this study or to purchase a general comprehensive report, contact:

George E. Brown II  gbrown@meyersresearch.com 

Jeff Friedlaender  jfriedlaender@meyersresearch.com

Frances Glick   fglick@meyersresearch.com 

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