Study: Deep-discounters going mainstream, giving grocery, mass more competition

More consumers are shopping deep-discount stores for a variety of needs.

Deep-discount retailers such as Dollar General, Dollar Tree and Family Dollar are poised to capture even more food and non-food grocery sales, according to the 2023 ChaseDesign Dollar Store Channel Survey. Grocery is now the top category shopped in the dollar store (deep discount) sector, followed by personal care and home goods.

At the same time, the sector could use some improvements. Nearly three-quarters (72%) of shoppers cited the lack of organization, navigation the clutter/cleanliness as the top reasons they find shopping at Dollar Stores a challenging experience.

“A key challenge retailers in this space need to overcome is the way their stores are organized and how categories are presented, as many customers find the experience challenging to navigate,” said Joe Lampertius, president, Chase Design.  

Rather than see deep-discount stores as a no-frills alternative to larger grocery stores, shoppers are looking for them to resemble their larger rivals more closely, he added.

The deep discount sector is focused on growing its grocery volume through increased store count and shopper visit frequency, noted the report. Dollar General, which has added more than 1,000 net new stores each of the last four years, is continuing its expansion in 2023. So is Dollar Tree.

“Dollar stores are getting an increasing amount of their sales from packaged, fresh and frozen foods, and they’re capturing those revenues from traditional retailers like supermarkets and mass merchants,” said Lampertius. “This emerging competition needs to be top of mind for those retailers as they strategize how, when and where to engage their shoppers.”

Lampertius added that a mainstreaming of dollar stores is taking place, with shopping saying national brands are already about half of their purchases and they want more frozen foods (51%), more national brands (47%) and more beauty and personal care brands (35%).  

Other key findings from the 2023 ChaseDesign Dollar Store Channel Survey include:

• Dollar stores are often part of a repertoire when it comes to food purchases.
• The most frequent shopping trips to dollar stores are fill-in and immediate need.
• The typical transaction in the sector is $25 or less.
• The majority of shoppers never use dollar store retailers’ apps, with an average of 20% of shoppers not even knowing the stores had an app.
• Those shoppers using dollar store apps and/or websites are checking sales and specials, looking up product availability and price, using coupons or finding new products.
• Shoppers say Dollar Tree is easiest store to find items, while Dollar General is the easiest retailer to find items online and in the app.
• Half of the shoppers surveyed never order online with these retailers. If they do, they’re picking up in store (36%).
• The top priorities for shoppers using a retailer’s app and website include having good categorization, ease of search and smooth operation of technology.
• Yet 25% mentioned issues with finding products and product information, 24% mentioned bad overall experience and 23% mentioned technology problems like issues with searchability and glitches.

“The Dollar Store Channel Survey clearly shows customers in the sector want those retailers to offer a product assortment and a shopping experience similar to what they have come to expect at supermarkets and mass merchants,” said Lampertius.