Dollar stores are looking to attract consumers who may not have previously considered shopping in one of their stores.
Chains and independents are spending money on remodels and training employees to raise the level of customer service. Store operators see this as a necessity to attract and retain high-income shoppers. More than one-third of the consumers shopping in the channel have annual household incomes above $50,000, according to Retail Forward.
Major chains such as Dollar Tree are opening larger stores that, according to a Gannett News Service report, "often resemble CVS's newer stores in their layout, bright lighting, careful organization and wide selection."
Product selection has become increasingly important with a number of dollar stores expanding their inventory of food products, particularly in the frozen and refrigerated departments, to drive more frequent store visits.
One of the challenges dollar stores are currently facing is the rise in oil prices. Not only do higher prices at the pump reduce the amount of money the core dollar store consumer has to spend but increases in petroleum prices put upward pressure on the costs of goods.
Edward Conte, who owns The $1 Limit in White Plains, New York, said he is seeing more stores selling items for more than a dollar. "Everything anyone sells is connected to oil -- the packaging, the plastics, everything," he said.
Discussion Question: What do you see as the primary challenges facing dollar stores and how do you see the channel evolving in years to come?