Dollar stores are a strange concept. How can everything in a store be so cheap, and how do they stay in business?
Continue reading to learn 10 interesting facts about dollar stores.
10. There Are a Lot of Them
Did you know that the two biggest dollar chains have more stores combined than the six biggest U.S. retailers put together? Yep, it’s true. And, they haven’t finished growing yet! The number of U.S. dollar stores reached 30,000 in 2016 (up 25% from 2011) and is expected to reach nearly 38,000 this year.
In fact, nearly one in three new stores opening in the U.S. is a Dollar General. What’s more is that Dollar General, Dollar Tree and Family Dollar will make up almost half of all the new stores opening up in the U.S. this year.
9. They Make a Lot of Money
Dollar stores make a LOT of money. In fact, they make billions. In 2018, Dollar Tree made $22 billion in revenue. In July 2019, Dollar General’s stock was worth $36.5 billion. Fast forward to 2020, Dollar Tree and Dollar General alone made $51.4 billion in revenue.
But, how exactly do these stores make so much money when they only charge a few bucks for their products? The answer is simple: many of the products sold at these chains aren’t bargains at all. Many products are actually less of a bargain than the larger, more expensive versions sold at other stores.
For example, you can get 16 ounces of milk at a dollar store for just $1. But, you can get a gallon of milk from other stores for just one or two dollars more than that. You’d have to purchase eight of those 16-ounce jugs just to equal one gallon (128 ounces) of milk. That means you’d end up spending $8 for a gallon of milk at a dollar store!
8. They Don’t Franchise
Dollar Tree doesn’t offer franchising opportunities. Neither does Family Dollar or Dollar General. All Dollar Tree and Family Dollar (which is owned by Dollar Tree) stores operate from their corporate headquarters in Chesapeake, VA. As for Dollar General, the closest you can get to franchising is selling Dollar General products online as an affiliate.
Now, if you had your heart set on opening a franchise, we have a bit of good news for you. There are alternative companies out there that offer franchise opportunities. These include the 99-cent store, Just-A-Buck, Liberty Dollar Stores, and Dollar Discount Store of America.
7. They Tend to Cluster in Working Class Areas
Dollar stores are often located in rural or low-income areas, choosing to operate in locations where big-box retailers like Walmart and Target don’t have stores.
According to an article published by Cheapism, the highest concentrations of dollar stores are in Ohio and Indiana to the north. Many are also in Kentucky and Tennessee through the South and into the Gulf states.
But why is it that they primarily operate in blue-collar, working-class states? Because operating in these areas is less expensive and, in turn, helps keep prices down. Not only that, but these stores typically don’t buy the land their stores are on, so if they end up in a location that doesn’t work out for them, they can easily pick up and move.
6. Only Two Main Dollar Stores
Yes, there are the smaller guys like Five Below and 99 Cents Only, but for the most part, there are just two main dollar stores — Dollar Tree (which owns Family Dollar) and Dollar General. Dollar Tree has more than 15,000 locations, and Dollar General has more than 16,000 locations.
They each amassed well over $20 billion in revenue last year. By contrast, second-tier competitor Five Below has only 1,000 locations. The specialty discount store amassed just over $1.8 million in revenue last year.
5. They’re Pressuring Big and Small Competitors
Competitors big and small are feeling the pinch from the growth of dollar stores. And, it’s especially hard on the small guys. As The New York Times stated in 2017, “dollar store chains are beginning to take over neighborhoods where mom-and-pop dollar stores have traditionally dominated.
Many independent store owners and workers say they are facing a bleak future as their customers have more choices, and rising rents and operating costs further cut into their dwindling profits.”
But, just because dollar stores are doing well doesn’t mean they aren’t feeling the pressure, too. As a matter of fact, they struggle to keep up with Amazon (I mean, who doesn’t?).
“Even with their great deals, dollar stores feel the same pinch as other retailers when the economy softens,” Cheapism wrote on its website.
4. They Create More Crime
At least that’s what nonprofit newsroom ProPublica says, anyway. According to the newsroom, discount chains foster violence and neglect in poor communities.
To come to this conclusion, ProPublica used information from a Gun Violence Archive report which lists more than 200 violent incidents involving guns at Family Dollar or Dollar General stores since the start of 2017, nearly 50 of which resulted in deaths.
They also considered the fact that routine gun violence has remained high in many cities and towns where dollar stores predominate despite declining sharply in prosperous cities around the nation. And owners of the chains do very little to maintain order in the stores.
According to a former worker, shoplifting is common at these stores, yet they lack security guards. What’s worse is that some managers will even go so far as to discourage employees from testifying in court against robbers because the employees are needed to staff the stores.
3. There’s an Association Between Proximity to Dollar Stores and Patterns of Racial Segregation
A study conducted by the University of Georgia shows a significant association between proximity to dollar stores and patterns of racial segregation in major U.S. metropolitan areas.
Indeed, dollar stores are sometimes associated with food deserts. According to Jerry Shannon, associate professor of geography in the university’s Franklin College of Arts and Sciences, the word “desert” can be misleading.
“The term desert suggests something that occurs naturally or, in this case, through the invisible hand of economic forces,” Shannon said in an article published on the university’s website.
“But differences in access to food and other shopping options are tied to decades of policies that intentionally created racial and economic segregation, like redlining, urban renewal, and restrictive housing covenants.”
Shannon also noted that past research on retailer locations mainly focused on distribution networks and household economic characteristics, not racial segregation. The study conducted by the University of Georgia addresses this issue.
2. They Began as Five and Dime Stores
At least Dollar Tree did anyway. According to the company’s website, Dollar Tree started in Norfolk, VA, as a Ben Franklin variety store in 1953, later renamed K&K 5&10, then Only $1.00, and eventually Dollar Tree.
Going from referencing the dime to referencing the dollar reflects changing financial times as well as inflation, Money Inc. said in an article published on its website.
FUN FACT: K. R. Perry, who opened the Ben Franklin variety store in Norfolk in 1953, also started a toy store — K&K Toys — in Norfolk in 1970. In 1991, K&K Toys was sold to KB Toys, and all assets were applied to the expansion of dollar stores.
1. There’s a Reason Why They’re Usually Messy
If you shop at dollar stores enough, you’ve probably noticed that they can be quite messy from time to time. And, there’s a reason for that. No, it’s not because they want to be messy and unclean.
According to an article published by Cheapism, “these stores run on minimal staff and they’re built to move a lot of product quickly. If that product has to sit on floors or in boxes for a bit while a cashier handles the register, so be it.”
Want more information about dollar stores? We’ve got you covered! Check out this article discussing 10 ways in which dollar stores scam consumers.