Dollar store shopping visits were up 14 percent in the past quarter, compared with the rest of brick-and-mortar, which was down 4 percent. According to the NPD Group's Shopping Activity Services report, some of the increase in traffic may be attributed to the increase in store openings.
"Not many other retailers are opening new stores, focused instead on taking advantage of those already in their stores and maximizing conversion to purchase, as well as expanding their online presence," said Marshal Cohen, chief industry analyst for The NPD Group told Food Business News. "Consumers walk into a dollar store with the intention to buy, not to browse, and almost always walk away with something. In addition, dollar store traffic has been increasing over the past few years because they have expanded their selection of products, making the channel even more useful and pleasing to price-savvy consumers."
The amount a consumer spends on a visit to a dollar store is up 3 percent since last year and 75 percent of all shoppers in a dollar store convert to a purchase on each visit.
Leader in the category, Dollar General (NYSE:DG), recently bested Walmart (NYSE:WMT) for the title of low-price leader, according to a pricing study by Sterne Agee analyst Charles Grom. Lower overall basket prices are a big focus for dollar stores. Family Dollar (NYSE:FDO) made an announcement earlier this year that it was embarking on a $50 million program to reduce prices on 1,000 SKUs, before ultimately announcing the sale of the company.
The demographic of a dollar store shopper is getting younger. Half of the shoppers are under the age of 45, up from 42 percent two years ago.
Cohen reported that millennials are increasing their activity in the market because social behavior is important to this group. "Seeing and touching, as well as researching and deciding where to purchase a product, are all important aspects of their shopping experience. This omnichannel and omnipresent age group also seeks instant gratification and at the lowest price, which is why younger consumers are also increasing their dollar store visits," he added.
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