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US Dollar Stores market report

Everything you need to make the right decisions

Providing the most comprehensive and up-to-date information and analysis of the Dollar Stores market, and the behaviours, preferences and habits of the consumer.

Mintel has the answers you’re looking for

What are the key challenges facing the industry and how fast are its rates of growth? Who is the consumer and what do they want? Where are the opportunities, where are the risks and what lies ahead?

Definition

For the purposes of this report, dollar stores are defined as retailers selling deeply discounted merchandise including name brand and private label products such as food, household supplies, health and beauty care, and more, typically ranging in price from $1-20. Some dollar stores are known as single-price stores, offering one price for all merchandise in stores. Dollar stores include but are not limited to:

  • Family Dollar
  • Dollar General
  • Dollar Tree
  • 99 Cents Only
  • Fred’s
  • Five Below

Note the market size used in this report sources revenues from “other general merchandise stores” as mentioned above. See Appendix – Data Sources and Abbreviations for more details. This report builds on the analysis presented in Mintel’s Dollar and Discount Store Retailing – US, August 2013.

Expert analysis from a specialist in the field

Written by Diana Smith, a leading analyst in the Retail sector, her extensive knowledge delivers in-depth commentary and analysis to highlight current trends and add expert context to the numbers.

Dollar stores at sitting fairly pretty at the moment. They are housed within a broader subcategory of “other general merchandise” stores (according to the US Census Bureau’s Annual Retail Trade Survey NAICS classification) which is the fastest growing sector within the total general merchandise category inclusive of discount department stores, warehouse clubs and supercenters. Immediate opportunities for improvement exist around in-store experiential retailing, e-commerce, grocery and overall quality perceptions. Diana Smith
Associate Director - Retail & Apparel

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Table of contents

  1. Overview

    • What you need to know
      • Definition
      • Executive Summary

        • The issues
          • General merchandise stores ringing up billions
            • 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
            • Figure 2: Attitudes toward online shopping at dollar stores, by generation, September 2016
          • Lingering perception issues persist
            • Figure 3: Reasons for not shopping at dollar stores, September 2016
            • Figure 4: Openness to shopping at dollar stores, September 2016
          • The opportunities
            • Not just for low income shoppers
              • Figure 5: Changes in shopping the channel, by household income, September 2016
            • Go beyond price; from transactions to experiences
              • Figure 6: Select shopping behaviors and attitudes regarding dollar stores, September 2016
            • Build up grocery
              • Figure 7: Attitudes toward food and name brands, by core demographics, September 2016
            • What it means
            • The Market – What You Need to Know

              • Poised for growth
                • Affinity is high
                  • Store expansion leads to increased accessibility
                  • Market Size and Forecast

                    • Sector propels forward as Americans seek value
                      • 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

                    • Low share, high growth
                      • Figure 10: Revenues of general merchandise stores*, by type, at current prices, 2011-16
                    • Staying relevant: easier said than done
                      • Figure 11: Retailers shopped for household/personal care needs, August 2015
                      • Figure 12: Planned retailer types for 2016 winter holiday shopping, by select demographics, May 2016
                      • Figure 13: Grocery purchase incidence, August 2016
                  • Market Factors

                    • Younger generations more likely to favor dollar stores
                      • Figure 14: Population by generation, 2011-21
                    • America continues to diversify
                      • 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
                      • Figure 17: Select attitudes toward shopping and spending, January 2016
                    • Rising wages could boost the channel
                      • Figure 18: Median household income, in inflation-adjusted dollars, 2004-14
                      • 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

                          • 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?

                                • Growth seen category-wide
                                  • Dollar General overview
                                    • Figure 20: Dollar General storefront, greater Knoxville, Tennessee, November 2016
                                    • Figure 21: Fiscal year revenues of Dollar General stores, at current prices, 2011-15
                                    • 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
                                    • Figure 25: Fiscal year revenues of Dollar Tree Inc., at current prices*, 2011-15
                                    • 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
                                    • 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
                                      • Figure 30: Fiscal year revenues of Five Below, at current prices, 2011-15
                                      • Figure 31: Percentage of net sales by major product group, Five Below, fiscal 2013-15
                                    • Fred’s overview
                                      • Figure 32: Fiscal year revenues of Fred’s, at current prices, 2011-15
                                      • Figure 33: Percentage of net sales by major product group, Fred’s, fiscal 2013-15
                                  • What’s Struggling?

                                    • Keeping it “old school”; online operations not a main priority
                                      • 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
                                          • Figure 35: Attitudes toward online shopping at dollar stores, by generation, September 2016
                                      • What’s Next?

                                        • Going beyond price
                                          • Mobile solutions
                                            • Figure 36: Coupon and mobile phone usage, by age, September 2016
                                          • In-store experiences
                                            • Figure 37: Select shopping behaviors and attitudes, September 2016
                                        • The Consumer – What You Need to Know

                                          • Dollar stores broaden appeal
                                            • Appeal extends to the upper echelon
                                              • Need to ramp up grocery
                                                • “I’ve never thought about it”
                                                • Retailers Shopped

                                                    • Three out of four shop at dollar stores
                                                      • Figure 38: Retailers shopped, September 2016
                                                      • Figure 39: Dollar Tree shopper profile, by select demographics, September 2016
                                                      • Figure 40: Dollar General shopper profile, by select demographics, September 2016
                                                      • Figure 41: Family Dollar shopper profile, by select demographics, September 2016
                                                  • Time Spent Shopping

                                                      • Nearly half of shoppers spend 15 minutes or less at dollar stores
                                                        • Figure 42: Time spent shopping, September 2016
                                                        • Figure 43: Time spent shopping, by dollar store retailers shopped, September 2016
                                                    • Changes in Shopping the Channel

                                                        • Nearly one third shopping more often at dollar stores
                                                          • Figure 44: Changes in shopping the channel, September 2016
                                                        • Dollar stores attracting more affluent customers
                                                          • Figure 45: Changes in shopping the channel, by household income, September 2016
                                                        • Millennials flock to dollar stores
                                                          • Figure 46: Changes in shopping the channel – Shopping more, by generation, September 2016
                                                      • Shopping Frequency

                                                          • Frequency needs to increase
                                                            • Figure 47: Shopping frequency, September 2016
                                                          • Men and upper income 18-34s shop more frequently than all shoppers
                                                            • Figure 48: Shopping frequency, by gender and age, September 2016
                                                            • Figure 49: Shopping frequency, by age and household income, September 2016
                                                          • Dollar Tree shoppers are the least frequent dollar store shoppers in general
                                                            • Figure 50: Shopping frequency, by retailers shopped, September 2016
                                                        • Customer Segmentation – Engagement Levels

                                                            • High Engagement (HE)
                                                              • Average Engagement (AE)
                                                                • Low Engagement (LE)
                                                                    • Figure 51: Consumer segmentation groups, by select demographics, September 2016
                                                                  • High engagement observed at all listed retailers
                                                                    • Figure 52: Retailers shopped, by engagement level, September 2016
                                                                • Categories Purchased

                                                                    • Consumables most popular items
                                                                      • Figure 53: Categories purchased, September 2016
                                                                    • Trip drivers vary by race
                                                                      • Figure 54: Categories purchased, by race and Hispanic origin, September 2016
                                                                    • Nearly half of shoppers buy at least four types of items
                                                                      • Figure 55: Repertoire of items purchased, September 2016
                                                                    • Parents are buying at a higher rate
                                                                      • Figure 56: Repertoire of five or more items purchased, by select demographics, September 2016
                                                                    • More needs, more time spent shopping
                                                                    • Food/Beverage Items Purchased

                                                                        • Pressuring convenience stores; top items sold for immediate consumption
                                                                          • Figure 57: Food/beverage items purchased at dollar stores, September 2016
                                                                        • Two out of five food shoppers buy at least five items
                                                                          • Figure 58: Repertoire of food and beverage items purchased, September 2016
                                                                        • Open to culinary suggestions
                                                                          • Figure 59: Attitudes toward technology and shopping, by key demographics, August 2016
                                                                          • Figure 60: Attitudes toward food and name brands, by key demographics, September 2016
                                                                      • Shopping Habits

                                                                          • Nearly four in 10 love to shop at dollar stores
                                                                            • Figure 61: Percentage who love shopping at dollar stores, by age and household income and engagement level, September 2016
                                                                          • ‘Highly engaged’ with technology
                                                                            • Figure 62: Shopping habits at dollar stores, by level of engagement, September 2016
                                                                          • Coupons are influential, but not a key trip driver
                                                                            • Figure 63: Food/beverage items purchased, by shopping habits, September 2016
                                                                            • 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
                                                                            • Figure 66: Tendency to shop by proximity, by area, September 2016
                                                                        • Attitudes toward Dollar Stores

                                                                            • Advantage – Shoppers see great ROI
                                                                                • Figure 67: Price-related attitudes toward dollar stores, by generation, September 2016
                                                                                • 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
                                                                                • Figure 69: Consumer expectations of dollar stores, by adults 18-34 with $75K+ HHI, September 2016
                                                                              • Threats – Consumer confusion and abandonment
                                                                                • Figure 70: Potential risks for dollar stores, by key demographics, September 2016
                                                                            • Reasons for Not Shopping at Dollar Stores

                                                                                • Perceptions of poor quality and selection top barriers to entry
                                                                                  • Figure 71: Reasons for not shopping the channel, September 2016
                                                                                • Now for some good news…
                                                                                  • Figure 72: Openness to the channel, September 2016
                                                                                  • Figure 73: Reasons for not shopping, by openness to the channel, September 2016
                                                                              • Appendix – Data Sources and Abbreviations

                                                                                • Data sources
                                                                                  • Sales data
                                                                                    • Fan chart forecast
                                                                                      • Consumer survey data
                                                                                        • Abbreviations and terms
                                                                                          • Abbreviations
                                                                                            • Terms
                                                                                            • Appendix – Market

                                                                                                • Figure 74: Revenues of general merchandise stores*, at inflation-adjusted prices, 2011-21
                                                                                                • Figure 75: Population by generation, 2011-21
                                                                                                • 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
                                                                                                • 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
                                                                                            • Appendix – Key Players

                                                                                              • Merchandise Definitions
                                                                                                • Dollar Tree
                                                                                                  • Family Dollar
                                                                                                    • Dollar General
                                                                                                      • Five Below
                                                                                                        • Fred’s
                                                                                                          • Historical sales information
                                                                                                            • 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

                                                                                                            • Figure 85: 99 Cents Only shopper profile, by select demographics, September 2016
                                                                                                            • Figure 86: Five Below shopper profile, by select demographics, September 2016
                                                                                                            • Figure 87: Fred’s shopper profile, by select demographics, September 2016
                                                                                                            • Figure 88: Time spent shopping at dollar stores, by repertoire of items purchased, September 2016
                                                                                                            • Figure 89: Dollar stores shopped, past three months, August 2011-16
                                                                                                            • Figure 90: Dollar stores purchased at, past four weeks, August 2011-16
                                                                                                            • Figure 91: Resources always referred to while shopping, by select stores, July 2015-August 2016
                                                                                                            • Figure 92: Resources sometimes referred to while shopping, by select stores, July 2015-August 2016