Discount and dollar stores saw a rise in demand during the holiday season as consumers hunted for lower prices and more options amid economic fluctuations. Major players such as Five Below, Ollie’s Bargain Outlet, Dollar General and Dollar Tree saw seasonal growth. Watch for many of these brands to expand their footprint and adapt their product offerings to attract more shoppers.
2023 fiscal year ended strong; 2024 looks promising as well
Five Below saw an increase of almost 20% in net sales for the fourth quarter due to a wide range of holiday decorations and stocking stuffers.
“Holiday 2023 marked a strong end to the year for sales performance as our amazing assortment of Wow product drove yet another quarter of comp transaction growth, led by the Five Beyond format stores,” said Joel Anderson, president and CEO of Five Below, in a release.
Ollie’s Bargain Outlet also reported a significant uptick in seasonal shopping, with a net sales increase of 18% thanks in part to consumers looking to save money on merchandise. In 2023, Ollie’s opened its 500th store.
“We recently completed our latest third-party real estate feasibility study, which utilizes demographic data and density across a changing U.S. landscape. The migration trend out of larger metropolitan markets into rural and suburban areas is a positive trend for Ollie’s and the study concludes that we could operate as many as 1,300 stores nationwide, up from a previous target of 1,050,” said John Swygert, president and CEO of Ollie’s Bargain Outlet, in a release.
Dollar General had an increase of 2.4% in the third quarter but saw net sales decrease by 3.4% in the fourth quarter. However, for the whole 2023 fiscal year net sales did increase by 2.2%. In 2023, Dollar General opened 987 new stores and relocated 129 stores.
Dollar Tree ended 2023’s fiscal year strong with consolidated net sales increase of 11.9%.
“While we are still in the early stages of our transformation journey, I am proud of what our team accomplished in 2023 and see a long runway of growth ahead of us,” said Rick Dreiling, chairman and CEO of Dollar Tree, in a release.
These discount stores continue their upward trend for the first fiscal quarter of 2024. Five Below is up 11.8% in net sales; Ollie’s Bargain Outlet saw an increase of 10.8%, while Dollar General was up 6.1%.
Why discount stores are seeing a boost in sales
One of the key sources of growth for discount and dollar stores is their ability to adapt to seasonal shopping habits. Consumers flock to these stores during key shopping seasons — back-to-school, Halloween, Thanksgiving and the winter holidays — looking for bargains on everyday essentials and seasonal items. Shoppers eager to maintain their standard of living without breaking the bank are responding well to discount stores that price items in the $1 to $5 range.
According to ChaseDesign’s 2023 Dollar Store Channel Survey, grocery items such as fresh produce have become the top category shopped in dollar stores, followed by personal care and home goods. This reflects a broader trend where consumers are shifting more of their grocery shopping to dollar stores due to the lower prices compared to traditional supermarkets.
“One of our top priorities is to ensure the communities we call home have access to fresh, affordable and convenient food options. We have exceeded our goal of having 5,000 total stores with fresh produce by January 2024,” said Emily Taylor, EVP and chief merchandising officer at Dollar General, in a release.
Dollar stores are strategically placed in urban and rural areas, providing convenient shopping experiences. They often serve as essential retail hubs in low-income neighborhoods and rural regions, where they might be the only local source for household necessities. Their small store formats also allow for customers to get in and out quickly with their needed items, saving both time and money.
Key takeaways
The sustained growth of discount and dollar stores underscores their critical role in today’s retail environment. These stores have successfully captured a growing segment of value-driven shoppers by offering low-cost goods that cater to everyday needs. With price sensitivity continuing to influence consumer behavior, discount and dollar stores are poised to remain a significant force in retail for the foreseeable future.
