retail news in context, analysis with attitude

The New York Times reports this morning on how the recessionary economy - and recessionary attitudes that persist despite the fact that the government has said that the recession officially ended more than a year ago - has created an environment in which “dollar stores have shown the biggest gain in shopper visits over the last year out of all the retailers that sell basic consumer goods, according to market research data. Manufacturers are racing to package more affordable versions of products common at those stores, and other budget retailers, feeling the loss of customers, are trying to duplicate their success.”

According to the story, research by SymphonyIRI Group indicates that not only are dollar stores growing sales among their existing consumers, but also stealing customers from other so-called budget formats, such as Walmart, which now is “adding thousands of items to its shelves, including inexpensive ones, and is asking dollar-store suppliers to create small, under-a-dollar packages for its stores, too,” the Times reports. “In areas with high unemployment, Wal-Mart is grouping together its less than $1 items in a clear challenge to the dollar stores.”

Also critically important - dollar stores are adjusting their mix to the changing times. The Times writes, “The dollar stores have found creative ways to keep their prices low. When commodity costs rose for suppliers, for example, the dollar stores asked them to decrease the number of sandwich bags in a box or pushed them to come up with a cheaper version of the products. To increase their attractiveness to the low-income customer, the dollar stores have also switched out merchandise like trinkets for necessities like food and detergent.”
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