by Jack Hitt
Heather Mann writes a blog called Dollar Store Crafts, which evolved from her occasional trips to the extreme-discount dollar stores near her home in Salem, Ore. Her readers admire her gift for buying really cheap stuff and then making cool and beautiful things from the pile. Her knockoff “alien abduction lamp” is jury-rigged from a small light fixture, two plastic bowls (flying saucer), a clear acrylic tumbler (tractor beam) and a small plastic toy cow (abductee) — all purchased for about five bucks. When I looked up, Mann was already around the corner, having fun with a bottle of discount detergent boasting a “bingo bango mango” scent. Just up the way was a bin of brown bags marked either “A Surprise for a Boy” or “A Surprise for a Girl.” Mann’s 5-year-old niece accompanied us on our tour and was crazed with excitement over these, and the truth is, we were all in the same exact mood. All around us, strange things hung here and there, urging us on an unending treasure hunt. Perhaps, like me, you have driven by and occasionally stopped in a dollar store and assumed that there were two kinds of customers, those there for the kitschy pleasure of it all — the Heather Manns of the world — and those for whom the dollar store affords a low-rent version of the American Consumer Experience, a place where the poor can splurge. That’s true. But current developments in this, the low end of retail, suggest that a larger shift in the American consumer market is under way.
We are awakening to a dollar-store economy. For years the dollar store has not only made a market out of the detritus of a hyperproductive global manufacturing system, but it has also made it appealing — by making it amazingly cheap. Before the market meltdown of 2008 and the stagnant, jobless recovery that followed, the conventional wisdom about dollar stores — whether one of the three big corporate chains (Dollar General, Family Dollar and Dollar Tree) or any of the smaller chains (like “99 Cents Only Stores”) or the world of independents — was that they appeal to only poor people. And while it’s true that low-wage earners still make up the core of dollar-store customers (42 percent earn $30,000 or less), what has turned this sector into a nearly recession-proof corner of the economy is a new customer base. “What’s driving the growth,” says James Russo, a vice president with the Nielsen Company, a consumer survey firm, “is affluent households.”
The affluent are not just quirky D.I.Y. types. These new customers are people who, though they have money, feel as if they don’t, or soon won’t. This anxiety — sure to be restoked by the recent stock-market gyrations and generally abysmal predictions for the economy — creates a kind of fear-induced pleasure in selective bargain-hunting. Rick Dreiling, the chief executive of Dollar General, the largest chain, with more than 9,500 stores, calls this idea the New Consumerism. “Savings is fashionable again,” Dreiling told me. “A gallon of Clorox bleach, say, is $1.44 at a drugstore or $1.24 at a grocery store, and you pay a buck for it at the Dollar General. When the neighbors come over, they can’t tell where you bought it, and you save anywhere from 20 to 40 cents, right?”
Financial anxiety — or the New Consumerism, if you like — has been a boon to dollar stores. Same-store sales, a key measure of a retailer’s health, spiked at the three large, publicly traded chains in this year’s first quarter — all were up by at least 5 percent — while Wal-Mart had its eighth straight quarterly decline. Dreiling says that much of Dollar General’s growth is generated by what he calls “fill-in trips” — increasingly made by wealthier people. Why linger in the canyons of Wal-Mart or Target when you can pop into a dollar store? Dreiling says that 22 percent of his customers make more than $70,000 a year and added, “That 22 percent is our fastest-growing segment.”
This growth has led to a building campaign. At a time when few businesses seem to be investing in new equipment or ventures or jobs, Dreiling’s company announced a few months ago that it would be creating 6,000 new jobs by building 625 new stores this year. Kiley Rawlins, vice president for investor relations at Family Dollar, said her company would add 300 new stores this year, giving it more than 7,000 in 44 states.
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Heather Mann writes a blog called Dollar Store Crafts, which evolved from her occasional trips to the extreme-discount dollar stores near her home in Salem, Ore. Her readers admire her gift for buying really cheap stuff and then making cool and beautiful things from the pile. Her knockoff “alien abduction lamp” is jury-rigged from a small light fixture, two plastic bowls (flying saucer), a clear acrylic tumbler (tractor beam) and a small plastic toy cow (abductee) — all purchased for about five bucks. When I looked up, Mann was already around the corner, having fun with a bottle of discount detergent boasting a “bingo bango mango” scent. Just up the way was a bin of brown bags marked either “A Surprise for a Boy” or “A Surprise for a Girl.” Mann’s 5-year-old niece accompanied us on our tour and was crazed with excitement over these, and the truth is, we were all in the same exact mood. All around us, strange things hung here and there, urging us on an unending treasure hunt. Perhaps, like me, you have driven by and occasionally stopped in a dollar store and assumed that there were two kinds of customers, those there for the kitschy pleasure of it all — the Heather Manns of the world — and those for whom the dollar store affords a low-rent version of the American Consumer Experience, a place where the poor can splurge. That’s true. But current developments in this, the low end of retail, suggest that a larger shift in the American consumer market is under way.We are awakening to a dollar-store economy. For years the dollar store has not only made a market out of the detritus of a hyperproductive global manufacturing system, but it has also made it appealing — by making it amazingly cheap. Before the market meltdown of 2008 and the stagnant, jobless recovery that followed, the conventional wisdom about dollar stores — whether one of the three big corporate chains (Dollar General, Family Dollar and Dollar Tree) or any of the smaller chains (like “99 Cents Only Stores”) or the world of independents — was that they appeal to only poor people. And while it’s true that low-wage earners still make up the core of dollar-store customers (42 percent earn $30,000 or less), what has turned this sector into a nearly recession-proof corner of the economy is a new customer base. “What’s driving the growth,” says James Russo, a vice president with the Nielsen Company, a consumer survey firm, “is affluent households.”
The affluent are not just quirky D.I.Y. types. These new customers are people who, though they have money, feel as if they don’t, or soon won’t. This anxiety — sure to be restoked by the recent stock-market gyrations and generally abysmal predictions for the economy — creates a kind of fear-induced pleasure in selective bargain-hunting. Rick Dreiling, the chief executive of Dollar General, the largest chain, with more than 9,500 stores, calls this idea the New Consumerism. “Savings is fashionable again,” Dreiling told me. “A gallon of Clorox bleach, say, is $1.44 at a drugstore or $1.24 at a grocery store, and you pay a buck for it at the Dollar General. When the neighbors come over, they can’t tell where you bought it, and you save anywhere from 20 to 40 cents, right?”
Financial anxiety — or the New Consumerism, if you like — has been a boon to dollar stores. Same-store sales, a key measure of a retailer’s health, spiked at the three large, publicly traded chains in this year’s first quarter — all were up by at least 5 percent — while Wal-Mart had its eighth straight quarterly decline. Dreiling says that much of Dollar General’s growth is generated by what he calls “fill-in trips” — increasingly made by wealthier people. Why linger in the canyons of Wal-Mart or Target when you can pop into a dollar store? Dreiling says that 22 percent of his customers make more than $70,000 a year and added, “That 22 percent is our fastest-growing segment.”
This growth has led to a building campaign. At a time when few businesses seem to be investing in new equipment or ventures or jobs, Dreiling’s company announced a few months ago that it would be creating 6,000 new jobs by building 625 new stores this year. Kiley Rawlins, vice president for investor relations at Family Dollar, said her company would add 300 new stores this year, giving it more than 7,000 in 44 states.
Read more:
