In times of inflation and post-pandemic uncertainty, cheap prices is the one thing uniting consumers and drawing them in.
That's put traffic at stores like Dollar General (DG), Five Below (FIVE), Big Lots (BIG), Family Dollar FDO and Dollar Tree (DLTR) has been through the roof lately, according to a recent report by location analytics company Placer.ai.
People Are Going To Discount Stores More Than Ever
Discount stores, or chains that sell popular food and home goods at below-retail prices, have always been popular, but are now seeing a new surge of visitors.
Compared to December 2019, foot traffic last December rose by 20.4% for Family Dollar (20.4%), 28.2% for Dollar General, 34.1% for Five Below, 3% for Big Lots and 13.7% for Dollar Tree.
Walmart (WMT), meanwhile, has only seen its foot traffic rise by 0.3%.
The reasons for such numbers are complex and have to do with multiple intersecting factors.
With inflation rising 7.5% in the last year, finding cheaper ways to secure everyday products remains a key concern for many Americans.
But at the same time, discount stores became a way for many to keep their shopping in one place during the pandemic.
While 18.5% and 6.4% of Walmart shoppers visited Dollar General and Five Below in the last quarter of 2018, those numbers rose to 23.4% and 10.5% by 2021.
"In the early days of the pandemic, mission driven shoppers and consumers affected by Covid's economic impact came for the value pricing and the wide selection of product offerings that could be found in a single place," the report reads.
"By the time the wider retail sector re-opened and the economic situation stabilized, consumers had already incorporated discount and dollar superstores into their regular shopping routines."
Placer.ai
Who's Shopping At Discount Stores Today?
Above all else, discount stores remain a way to get similar foods and households goods at a lower price.
While 45% of the the general population earned under $50,000 a year between December 2020 and November 2021, a respective 59%, 54%, 52%, 50%, 48%, and 47% of customers at Family Dollar, Dollar General, Walmart, Five Below, Big Lots and Dollar Tree did so.
Mega-chains like Walmart remain a monolith for the general population as it still had 69.4% of the overall visits to the six biggest discount brands.
But stores that are able to offer lower prices may be crowding out a key sector of its audience as this number was at 75.8% in the first quarter of 2020.
"Walmart may still rule the discount superstore sector – but brands like Dollar General, Dollar Tree, and Five Below are solidifying their position," reads the report.
"So while Walmart’s position as discount e-commerce leader remains secure, the offline discount superstore sector is getting increasingly crowded – and competition is heating up."
