Will 2023 be all about value?
With customers continuing to seek lower-priced shopping options due to inflation, the major players in value retailing are already far outpacing others in opening new stores in 2022 and appear to be riding mighty tailwinds heading into 2023.
For the fiscal year in January, Dollar General and Dollar Tree are on track to open 1,300 new stores combined, according to The Wall Street Journal. Dollar stores’ appeal is proving particularly strong in remote areas where not even major global retailers like Walmart can be found, and where amenities like next-day delivery from Amazon are rarely available.
Dollar General has announced plans to expand its slightly higher-market concept, Popshelf, into more suburban markets, according to CNBC. The chain intends to double its store count to reach 300 next year, open 1,000 stores in the next three years and eventually operate 3,000 Popshelf locations. The format sells products mostly under $5, a relatively low price ceiling, albeit higher than Dollar General, targeted at a higher-income demographic looking for deals. The company has also opened Forty Popshelf shops inside its Dollar General stores.
Among other value-players, Five Below and TJX stand out with more than 100 new stores arriving in 2022.
Value concepts in grocery have likewise expanded their footprints greatly over the past year, according to Winsight Grocery Business.
Aldi will have opened 150 stores as it expands into the Southeast. Deep-discounted supermarket Grocery Outlet has been opening stores across the East Coast and Mid-Atlantic regions in eight states. And BJ’s Wholesale Club sped up its expansion in New York and nationwide.
“Value-oriented grocers have been uniquely well positioned in recent years. Initially, that was because of a wider surge of visits to grocery stores, driven by the onset of the pandemic,” Ethan Chernofsky, VP marketing at foot traffic analytics firm Placer.ai, told WGB. “This year, the strength has been supported by the wider economic situation that has made value an even stronger offering.”
Value retailing, including the big box discounters, also grew popular, even among higher income brackets during the last economic downturn, though their ongoing popularity in some segments and locations this time around could depend on inflation.
- Dollar Stores Lead a Surge in New Retail Openings – The Wall Street Journal
- Dollar General’s new Popshelf stores chase inflation-weary shoppers in the suburbs – CNBC
- A snapshot of the 2022 grocery grand opening landscape – Winsight Grocery Business
- How high did US inflation get this year and where is it headed in 2023? – The Guardian
DISCUSSION QUESTIONS: How much of the expansion success by dollar stores, budget grocers and other value-first chains depends on enduring inflation? What other factors may be more important?