What Happens to Dollar General When Walmart's Neighborhood Market Opens Next Door?
What would happen to the dollar store business if consumers searching for deals learned that they could get lower prices shopping in Walmart? The answer to that question may be coming now that a 22-month research study by Bloomberg Industries points to Walmart offering better prices almost all the time.
According to the research, Walmart had lower prices than Dollar General 100 percent of the time in household goods. It also beat its dollar store competitor 85 percent of the time when it came auto supplies, grocery, health and beauty care and pharmacy.
So what is behind the success of dollar stores?
According to Poonam Goyal, a senior analyst at Bloomberg Industries, the answer lies in dollar stores' positioning in residential areas. That advantage will disappear, she told Bloomberg News, as Walmart opens its own small format stores in the same areas.
Dollar stores have long been on Walmart's radar. David Glass pointed to the channel as the biggest challenge facing the chain when he was CEO of Walmart in the '90s. Back in 2011, the New York Post reported the retailer had approached suppliers in search of lower opening prices. The reason given was that dollar stores were eating Walmart's lunch.