Discount stores aren’t a new concept in the retail industry, but this corner of the retail market has taken off with the increase of consumer interest in value pricing. Despite some store closures, discount retailers were extremely profitable in 2021. As a result, in 2022, many dollar stores and discount retailers are opening more stores. We analyzed foot traffic to Big Lots, Dollar General, Dollar Tree, and Family Dollar to determine what discount retailers can expect in the next few years.
Which Discount Retailer Saw the Most Visits in 2021?
According to our data, Dollar General saw far more visits to its stores than Dollar Tree, Big Lots, and Family Dollar. Visits to Big Lots and Family Dollar remained relatively flat throughout 2021, with the exception of the first two months of 2022. In contrast, Dollar General and Dollar Tree saw ebbs and peaks from January 2021 through February 2022. Both Dollar General and Dollar Tree saw small peaks throughout 2021 during the months of February, May, July, October, and December, possibly due to consumers shopping for budget-friendly gifts and party supplies. Both dollar stores saw a significant decline in visits after December 2021. This could coincide with Dollar Tree raising its product pricing in the 1st quarter of 2022. Interestingly, Dollar General’s approach to pushing its $1 strategy seemed to help it sustain consumer visits, despite that decline after the holidays.
Post-Holiday Decline in Discount Retail Foot Traffic
Early on in Q1 2021, Dollar General, Family Dollar, and Dollar Tree followed similar retail foot traffic patterns. Starting in February 2021, foot traffic to Big Lots stores began to increase, peaking in May 2021. Dollar General, Dollar Tree, and Big Lots all saw foot traffic decline significantly after July. Unlike other discount retailers, Family Dollar sustained its foot traffic throughout the summer, possibly due to consumers purchasing supplies for summer getaways. After December 2021, all discount store brands saw a sharp decline in foot traffic, reaching low points in January 2022. A likely explanation for this trend could be that consumers shopped ahead of time for New Year’s celebrations and/or shopped online. By February 2022, foot traffic to Dollar Tree stores was 11% lower than January 2021. Big Lots’ foot traffic was the most affected, compared to the other discount retailers. February 2022 foot traffic to Big Lots was 25% lower, compared to January 2021. Big Lots is known for its home essentials, which aren’t bought as often as items sold at dollar stores.
How Did Dollar Stores Perform in Q1 2022?
Dollar General and Dollar Tree announced their Q1 2022 earnings on May 26, 2022. We analyzed foot traffic data to Dollar General and Dollar Tree locations, as well as Dollar Tree’s subsidiary Family Dollar, to see how these dollar store chains stack up against each other. Here are the top three takeaways from our analysis:
- Dollar General and Dollar Tree followed similar foot traffic trends throughout 2021 and into 2022. Both brands’ foot traffic decreased in Q2 and Q3, compared to Q1 2021. But in Q4, foot traffic increased, before declining again in Q1 2022.
- Meanwhile, Dollar Tree’s subsidiary Family Dollar experienced increased foot traffic in Q2 and Q3, compared to Q1 2021 levels. However, in Q4 and into 2022, foot traffic declined.
- By the end of Q1 2022, each brand’s foot traffic was below the levels each experienced in Q1 2021. Dollar General, Dollar Tree, and Family Dollar saw declines of 21%, 20%, and 16%, respectively, compared to Q1 2021.
Due to inflation, many consumers are cutting back on spending and shopping trips. Although dollar stores are usually great options for those looking to stretch their budgets, the year-over-year decline in foot traffic to Dollar General, Dollar Tree, and Family Dollar locations suggests that even dollar stores are being impacted by the rising cost of living.
Will Discount Retailers Continue to Hold Consumer Interest?
Consumer interest in discount retail won’t go away anytime soon, especially with inflation impacting the price of goods and services. In rural areas, many Americans live far from grocery and department stores and rely on Dollar General and other discount retailers for everyday essentials.
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