Consumers turn to dollar stores for affordable groceries

Dollar stores provide consumers expanded options at affordable prices, including for food, which is especially valuable in a volatile economy.
Elizabeth Lafontaine
Chief Retail Analyst, Retail Leader
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One sector of the retail industry feeling the love is the dollar store channel. In a year where consumers face rising costs of living and lower savings rates, dollar stores have quickly embraced and celebrated shoppers. While the mass merchant channel is usually seen as the dominant player among value grocery chains, dollar stores have steadily increased their share of the space.

Dollar General

According to Coresight Research, one in five shoppers buy groceries at a dollar store in the U.S. The study also found enhanced grocery options, like fresh categories and healthy alternatives, were being added to fuel the growth in consumer demand. 

Dollar stores have always been a cornerstone of the retail industry, but their explosive growth during the past few years has cemented them as a competitor to other retailers in essential industries. Dollar General just opened its 19,000th store in January, up 16% from its pre-pandemic store count.

Dollar stores provide consumers in retail deserts with expanded options at affordable prices, and at a time when the bifurcation of consumers’ socioeconomic status widens, they’re uniquely positioned to attract new buyers. Retailers who play in grocery or other CPG categories cannot rule this sector out when determining their competitive set.

As consumers look to mix and match their spending habits to stretch their wallets, larger portions of their funds may be allocated to dollar stores for non-specialty or premium items. Dollar stores even appear in popular TikTok videos, as consumers put together entire recipes or events using only ingredients from those retailers. Any retailer that can save consumers money while providing close proximity to a local community will surely pose a threat to others in the grocery space.