Overview of the Retail Dollar Store Market in the United States - Opportunities for Canadian Agri-Food Exporters

May 2011

The Government of Canada has prepared this report based on primary and secondary sources of information. Readers should take note that the Government of Canada does not guarantee the accuracy of any of the information contained in this report, nor does it necessarily endorse the organizations listed herein. Readers should independently verify the accuracy and reliability of the information. This report is intended as a concise overview of the market for those interested in its potential and is not intended to provide in-depth analysis which may be required by the individual exporter. Although every effort has been made to ensure that the information is correct, Agriculture and Agri-Food Canada assumes no responsibility for its accuracy, reliability, or for any decisions arising from the information contained herein.

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Table of Contents

Executive Summary

  • Together, Dollar General, Family Dollar and Dollar Tree have some 19,500 outlets across the U.S.
  • Recent research has revealed that there is a higher proportion of affluent consumers shopping at dollar stores, and the number increased by 18% between 2007 and 2008. This is a viable retail market channel across income brackets.
  • Approximately 59% of consumers who live in households with incomes under US$25,000 shop at the channel once a month or more.
  • Food continues to be a booming segment of dollar store products. Dollar stores have expanded food offerings by adding coolers and refrigerators, in order to sell fresh and frozen items, causing consumers to divert trips away from grocery stores and mass merchandisers to fill up on grocery items at very low prices.
  • One of the major changes that has occurred in the dollar store channel is the selling of brand products. Both Dollar General and Family Dollar have attempted this with positive returns.


With supermarkets and mass merchandisers, such as Wal-Mart, offering everything from food, to medicine, to electronics, there has been a growing trend of one-stop shopping in the U.S. However, as these large retailers continue to expand in size and number, there has also been increased demand for more simplified shopping formats, which has led to greater growth in convenience channels. This trend, coupled with the harsh economic reality experienced by many U.S. consumers, results in a very competitive and well positioned retail player in dollar stores. Dollar stores present a significant challenge to other retail channels, as they offer convenience, simplicity and low prices that remain appealing to both value-conscious and affluent consumers.

Dollar stores have become a family favourite and a popular shopping spot for all income groups. The stores are usually small to mid-sized, with an assortment of products and packaged food for sale at an affordable price. Recently, dollar stores have improved food selections and increased products offerings to include more foodstuffs, such as frozen items. The stores not only offer food, but also include other basic household items such as apparel, cleaning supplies and health and beauty products at exceptionally low prices, usually under US$5. Dollar stores have now become so successful that they have broadened their retail offerings to include stylish clothing, appliances and electronics, many ranging from US$5 to US$10.

The economic downturn brought about financial insecurity, high unemployment and declines in disposable incomes, which have contributed to a change in US consumer behaviour. Frugality is now the norm, and with consumers spending less, dollar stores are becoming increasingly popular. Within the variety store channel, dollar stores make up the majority of sales and have become increasingly important to US consumers. The industry has capitalized on the recent global economic recession, which has caused consumers to search for bargains rather than spending on expensive branded products. Even with this shift, dollar stores are introducing popular brands to their merchandise for the capitalization on shifting consumer habits.

As retailers such as Target and Costco make bargain hunting trendy, dollar stores have become increasingly frequented by upper-income households, along with low to middle-income families. In fact, store growth within the dollar store channel is unparalleled by any other retail format. Top dollar store chains in the US include Dollar General, Family Dollar, Dollar Tree, Fred's and 99 Cents Only.

As dollar stores gain recognition as legitimate retailers, and there are more cost-conscious consumers in low- and high-income households, traditional grocery retailers have begun to include dollar store aisles in their own stores, in order to capture some of the channel's success. Moreover, in an effort to attract more customers and expand basket sizes, dollar stores have begun to add more food and beverage items, including perishables and frozen foods, to their store merchandise. Not only have consumers responded to this addition with great enthusiasm, but this growth in food offerings by non-grocery retailers has given the traditional retail food market so much competition that it has helped to restrain rising food prices.

Quick Facts

Top Selling Products at Dollar Stores (2009)
Product % of shoppers that buy product
1. Home cleaning aids 58%
2. Greeting cards/wrapping paper 54%
3. Toiletries 50%
4. Office or school supplies 48%
5. Food and drinks 46%
6. Health and beauty aids 38%
7. Kitchen supplies 38%
8. Decorations for home or office 29%
9. Toys 25%
10. Pots, plants and gardening supplies 23%
  • Together, Dollar General, Family Dollar and Dollar Tree have some 19,500 outlets in the U.S.
  • In 2008, 52.5% of consumers shopped at a dollar store, which rose to 53.1% in 2009.
  • Typically, dollar store shoppers make 10 trips a year, spending an average of $9.70 per visit.
  • Consumers with family incomes under US$30,000 account for 51% of dollar store sales.
  • Consumers from households with incomes less than US$30,000 are more likely to shop at dollar stores compared to those with higher household incomes.
  • These consumers are also reported to shop at dollar stores once per month or more, while 56% of those with incomes between US$25,000 and US$49,900 do the same.
  • The primary reasons for shopping at dollar stores in 2009 were that they help save money (84% of shoppers), are conveniently located (46%), and help save time (36%).

Focus on Food

  • As the economy staggered and more consumers frequented the channel, dollar stores expanded food offerings by adding coolers and refrigerators to more stores in order to sell fresh and frozen items.
  • Food continues to be the booming segment of dollar store products. Consumers are increasingly diverting trips away from grocery stores and mass merchandisers to fill up on grocery items offered through dollar store outlets at very low prices.
  • In the 2009 fiscal year, Dollar General reported sales of US$11.8 billion, with consumables accounting for 70% of total sales.
  • Along with basic household merchandise, health and beauty care products and toys, 99 Cents Only was one of the first dollar store companies to include a wide variety of grocery items, and now food accounts for the majority of sales.
  • By the end of 2008, Dollar Tree stores had frozen and refrigerated foods in 1,107 stores.
  • Family Dollar has placed a new emphasis on food and consumables due to an increased demand for cheaper food items during the recession.
  • 99 Cents Only offers an extensive range of consumables, which account for the majority of sales, including closeout items and name-brand products, such as produce, deli goods and other grocery items.
  • Dollar Tree has also expanded to selling food, offering a wide array of items including spices, condiments, candy, beverages, nutritional bars and energy drinks.
  • Both Dollar General and 99 Cents Only have reported that over 50% of their sales are within categories of consumables such as food.
  • Dollar stores are increasingly introducing more brand name food items to their merchandise.
  • Family Dollar plans to introduce 250 new edible brand name food items to its inventory, including Triscuits and Double Stuffed Oreos.
  • 99 Cents Only stores have capitalized on this growing demand by offering a selection of "fancy foods" that appeal to affluent consumers.
  • 99 Cents Only stores now stock consumable products, including food and beverages such as produce, deli, and other basic grocery items. The company has started to offer gourmet and organic foods in response to the growing health and wellness trend.
  • Dollar stores have been attracting more affluent consumers by offering healthier prepared foods such as dried fruit, low-calorie snacks as well as frozen meals like Lean Cuisine.
  • Through an expanded food assortment, including refrigerated foodstuffs, perishables and non-perishables, Family Dollar offers both quality brand name and private label products at value saving prices.
  • Like others in the channel, Fred's sells a variety of food items, including frozen items such as ice cream.

Major Dollar Store Chains

Major Dollar Store Chains (2009)
Chain Sales Number of Stores
Dollar General US$11.8 billion 9,273
Family Dollar US$7.4 billion 6,800
Dollar Tree US$5.2 billion 4,000+
Fred's US$1.8 billion 952
99 Cents Only US$1.3 billion 281

Dollar General

  • Dollar General was founded in 1939 in Scottsville, Kentucky.
  • It is now the nation's largest small-box discount retailer, operating over 9,200 stores in 35 states.
  • In 2004, Dollar General added refrigerated coolers carrying dairy products, eggs, lunch meats and frozen foods, including national brands and private labels, to many of its stores with the goal of increasing the frequency of consumer shopping trips.
  • The 2010 fiscal year saw a 10.5% increase in net sales, along with the establishment of 600 new stores and the remodelling or relocation of 504 stores.
  • In 2011, Dollar General plans to open 625 new stores and remodel or relocate 550 stores.
  • Dollar General is a "Fortune 500" company, ranking it as one of the largest American companies. Its rank at 259 brings it up 15 places from the previous year.

Family Dollar

  • Family Dollar was first established in Charlotte, North Carolina in 1959.
  • It now ranks as the second largest dollar store chain in the U.S., and ranks 11th on Home Textiles' Top 50 Retailing Giants.
  • With more than 6,800 stores in 44 states, ranging from Maine to Arizona, Family Dollar is one of the fastest growing dollar store companies in the U.S.
  • Like Dollar General, Family Dollar makes the Fortune 500 list, ranking 305 out of 500.
  • The company plans to open 300 new stores and remodel between 600 and 800 stores in 2011.
  • Offering merchandise from health and beauty products to automotive supplies, apparel, cleaning supplies, and food and candy, the majority of Family Dollar's merchandise is available for less than US$10.

Dollar Tree

  • Dollar Tree was first established in 1953, under the name Ben Franklin Variety Store. The company was re-named Dollar Tree Stores Inc. in 1993.
  • The company now boasts over 4000 stores and operates in 48 states.
  • Along with opening its 4000th store in 2010, Dollar Tree also acquired 85 Canadian Dollar Giant stores.
  • Dollar Tree offers private label as well as national brand products in their wide selection of house wares, seasonal décor, toys, electronics, health and beauty products, party supplies, and food and candy.
  • Every item in Dollar Tree stores is a dollar, with food, party supplies, health and beauty care, and house wares being the top performing categories.
  • The mix of merchandise sold in Dollar Tree stores continues to shift more towards consumables. Along with their acquisition of 138 Deal$ stores, Dollar Tree now offers an assortment of merchandise in these acquired stores that sell for more than their traditional price point of $1.


  • Founded in 1947, Fred's operates over 645 stores, as well as 307 pharmacies across 15 states in the Southeastern U.S.
  • Net sales decreased between 2008 and 2009, from $1,798 million to $1,788 million, a year-over-year decrease of 0.6%.
  • Gross profit for the year decreased 0.8% year-on year, from $503.0 million in 2008 to $499.2 million in 2009. However, the company aims to continue growing at an aggressive rate.
  • The largest contributor to total sales in 2009 was pharmacy, accounting for 33.5% of total sales.
  • Fred's offers over 12,000 items from school supplies to garden care items to food and beverages, including private label and brand products.

99 Cents Only

  • As the oldest single-price retail chain in the U.S., 99 Cents Only prides itself on never selling its merchandise for more than 99 cents.
  • Founded in 1982, 99 Cents Only has grown to over 281 stores across four southern states, including California, Texas, Arizona, and Nevada.
  • In the 2010 fiscal year, 99 Cents Only stores had total net sales of $1.36 billion, an increase of 4% from 2009. This boost was primarily a result of increased transaction counts and average net sales per store that was open the full year.

Consumer Market

Dollar Store Consumer Breakdown

Dollar Store Shoppers by Income (2009) ( US$)
Shopper Type All <$25,000 $25,000-49,900 $50,000-74,900 $75,000-99,900 $100,000-149,999 $150,000 and up
Devotee 38% 43% 38% 33% 38% 24% 33%
Infrequent 36% 46% 40% 40% 29% 33% 28%
Quality Seeker 25% 11% 22% 28% 34% 42% 39%

Dollar Store Devotees (38% of dollar stores shoppers)

  • These consumers have high affinity for dollar stores and shop at them frequently.
  • Dollar stores have been particularly successful with minority groups.
  • About 59% of consumers who live in households with incomes under US$25,000 shop at the channel once a month or more.
  • Close to 45% of dollar store total sales stem from low-income households
  • The addition of food to dollar stores has prompted 49% of devotees to state that they would shop at dollar stores more often if they were offered a larger selection of packaged foods and beverages.
  • This demographic is highly affected by price and typically enjoy hunting for bargains.

Infrequent Shoppers (36% of dollar store shoppers)

  • This group of consumers does not enjoy shopping in any channel, and avoids shopping to save money.
  • Once again, low-income consumers with household incomes less than US$25,000 are highly represented in this cluster, but are more likely to be Caucasian and over the age of 45.
  • This segment would be more attracted to dollar stores and other retail channels through discount prices on products typically used by over-55s.

Quality Seekers (25% of dollar store shoppers)

  • This demographic is reportedly cooking more at home and eating healthier, thus, marketers can attract them by providing discounts on meal ingredients, pre-packaged meals and fresh, perishable foods.
  • This group of consumers is less focused on price, and more focused on quality. It is largely made up of consumers with incomes of over US$75,000.
  • The modern designs, addition of perishables and cleaner stores have attracted this demographic to spend in dollar stores.
  • Close to 42% of consumers with incomes between US$100,000 and US$149,000 shop in dollar stores once a month or more, while approximately 34% of consumers with incomes over US$150,000 frequent the channel in the same time period.
  • High income consumers spent 18% more at dollar stores in the second half of 2008, compared to 2007.
  • Only 8% of dollar store total sales are attributed to high-income shoppers.

Current Industry Trends and High Growth Product Areas

Changing Consumer Demographics

  • Recent research has revealed that there is a higher proportion of affluent consumers shopping at dollar stores, and the number increased by 18% between 2007 and 2008. This is a viable retail market channel across income brackets.
  • The recession has brought about greater demand for dollar stores within the middle- and upper-class segments of the U.S. consumer market.

Brand Names

  • One of the major changes the dollar store channel has made is selling brand products. Both Dollar General and Family Dollar have attempted this with positive returns.
  • By carrying national brands, dollars stores have gained legitimacy for consumers who prefer to purchase brand products.
  • Dollar General offers close to 12,000 products from brand name manufacturers such as Procter & Gamble, Kimberly-Clark, Kellogg's and General Mills.
  • The company will also begin to carry Hanes products, demonstrating the waning reluctance of brand name companies to have their products sold and displayed in dollar stores.
  • Approximately 80% of products sold by Dollar General are from big name national brands including Bounty, Crest, Coca-Cola and Cheerios.
  • Family Dollar has recently been making more room for food on its shelves, and added 200 national brand food and consumable products in 2010 alone on top of expanding its private label food products.
  • Fred's also stocks several brand name items such as Campbell's, Dole and Windex.

Cleaning Products

  • Home cleaning aids represent the largest category of consumer expenditure in dollar stores. Close to 58% of dollar store shoppers reported buying cleaning products on a regular basis.
  • Increased demand for consumables has driven growth in cleaning products and supplies.
  • The majority of shoppers who frequent the channel report that cleaning products, greeting cards, and toiletries are the main products they purchase.

Opportunities for Canadian Agri-Food Exporters

  • Opportunities for Canadian agri-food exporters in the dollar store market include products such as pickles, relish, olives, dry packaged dinners, pasta, sugar, shortening and oil.
  • Sports drinks, dry fruit snacks, aseptic juices, salad dressings, rice, pastry and doughnuts, fresh bread and rolls, refrigerated foods and frozen foods should also see considerable growth in the future.
  • Within the dollar store market, the capacity to maintain a constant supply is not important as dollar stores often stock their products without the prospect of re-stocking.
  • Dollar stores take advantage of savings through end run and ousted purchases, so this is an opportunity for companies interested in one time shipments.
  • The incorporation of food merchandise into this channel presents ample opportunity for Canadian agri-food exporters who can easily benefit from this rising demand.

Further Information

For additional market and product reports please visit the Agri-Food Trade Service's United States Market Information section: www.ats-sea.agr.gc.ca/info/amr-eng.htm.

Canadian consulates exist in various regions throughout the U.S. To contact a trade commissioner in a specific region, visit: www.tradecommissioner.gc.ca/eng/offices-united-states.jsp. Click on the desired region and the ‘Contact Our Team' link to obtain trade commissioner contact information.

Key Resources

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  • Central Intelligence Agency. "United States." World Factbook. 16 Mar. 2011.
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  • "Dollar General: New President, Strategic Changes." Home Textiles Today 27.44 (2006): Canadian Agricultural Library.
  • Dollar Tree. "About Us." Dollar Tree. 2011.
  • Dowdell, Stephen. "Changing Channels." Progressive Grocer 85.6 (2006): 78-80. Canadian Agricultural Library. July 2007.
  • The Economist. "United States Fact Sheet." The Economist. 2007.
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  • Family Dollar. "History." Family Dollar. 2011.
  • Fortune. "Fortune 500." Fortune. 2010.
  • Fred's. "About Us." Fred's. 2011.
  • Hale, Todd. "Dollar Store, No Frills: The New Retail Landscape." Nielsen. 2004.
  • - - -. "Gas Price Hikes Put Brakes on Spending." Nielsen. 2006.
  • Heller, Laura. "Family Dollar to Grow Bottom Line with New Initiatives." Retailing Today 45.20 (2006): Canadian Agricultural Library.
  • Hoffer, Gail. "Dollar General remains top stock pick on 4Q sales growth." Retailing Today. 22 Mar. 2011.
  • - - -. "Family Dollar a hot commodity." Retailing Today. 14 Mar. 2011.
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  • Home Textiles Today. "Dollar General Posts Strong Fourth Quarter, Readies Home Expansion." Home Textiles Today. 4 Dec. 2010.
  • Howell, Debbie. "Dollar Stores Cash in on Food Offerings." DSN Retailing Today. 29 July 2004.
  • - - -. "National Brands on Board." DSN Retailing Today. 24 Apr. 2006.
  • Kapner, Suzanne. "The Mighty Dollar." Fortune 159.8 (2009): 64-66. Canadian Agricultural Library.
  • Lempert, Phil. "Sweet and Sour." Progressive Grocer 86.7 (2007): 14. Print.
  • McTaggart, Jenny, and Debra Chanil. "74th Annual Report of the Grocery Industry." Progressive Grocer 86.5 (2007): 20-24. Print.
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  • Progressive Grocer. "Walmart, Kroger Still Tops Among Retailers: STORES Magazine." Progressive Grocer5 July 2010.
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  • Rosenbloom, Stephanie. "Don't Ask. You Can Afford It." The New York Times. 1 May 2009.
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  • Troy, Mike. "Family Dollar escalates private brand efforts." Retailing Today. 4 Mar. 2011.
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