Because of the prolonged weak economic environment in the US, shoppers’ focus has shifted increasingly towards discount retailers.

Value players such as Dollar General adapt store footprints to the location

As a result, network growth at specialist value players such as Dollar General, Family Dollar and Dollar Tree is occurring at a steady rate.

The eight leading US value groups have added more than 5,000 stores in the past five years, and Planet Retail projects 7,000 more by 2017. Market leader Dollar General is adding new stores at a rate of two per day as it hopes to capture an increasing share of the burgeoning market (it holds 23% at present).

In the last couple of years the retailer has identified the west coast as a region for potential growth - an area where penetration was low. Its first Californian shop was unveiled in 2012, and 50 stores were opened in year one and another 50 are in the pipeline for year two.

Interestingly, more affluent consumers are also being drawn towards the discounters as bargain-hunting has become socially acceptable in the downturn. Discounters have noted an increasing number of shoppers from high-income households coming into their stores.

Dollar General has not only been focusing on geographical expansion via new stores, but has also been revamping its existing network in an effort to drive footfall from affluent consumers interested in finding a bargain but who still want a welcoming shopping environment.

Alongside low prices, discount stores have geographical versatility working in their favour. Retailers such as Dollar General are able to adapt their store footprint to the location they are entering. Unlike the US mass merchants, which need large sites on retail parks, players in the value market tend to tailor their store footprints for a wider reach. Dollar General units tend to be about 7,300 sq ft, while Dollar General Market sites are generally 16,000 sq ft and are thus able to offer a bigger grocery selection.

In the past few years there has been a ramp-up of the newest format, Dollar General Plus, which falls between the retailer’s two other fascias in terms of size at about 10,000 sq ft. The three-pronged strategy gives the retailer the advantage of being able to move into any type of neighbourhood.

With its aggressive growth plans and as discounters cement their popularity with the wider shopper community, Dollar General is poised to become an even bigger force in US retail.

  • Louise Howarth, senior retail analyst, Planet Retail.

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