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The Rise of Dollar Stores: Key Competitors and Trends in the US Variety Stores Channel

August 2019

In an era marked by the rise of e-commerce, the variety stores channel stands out as a rare example of recent success in store-based retailing in the US. This success is due overwhelmingly to the robust performance of the leading US “dollar store” chains. This briefing will lay out the reasons for dollar stores’ sustained ascendance, explore the key trends and competitors in the category, and discuss the prospects for the continued growth of dollar stores over the forecast period.

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Key Findings

Dollar stores are some of the top performers in US store-based retailing

Even as many other store-based retailing channels in the US struggle, the variety stores channel has posted impressive sales growth, thanks largely to the success of three “dollar store” chains – Dollar General, Dollar Tree and Family Dollar.

Emphasising value has expanded dollar stores’ customer base

Dollar stores are best known for their extremely low prices, which endear them to lower income consumers. The value and convenience dollar stores provide have also helped broaden their appeal to middle-income and even affluent consumers.

Extremely low operating costs help dollar stores remain profitable

Dollar stores are able to keep prices low on the merchandise they sell because they have adopted effective strategies to keep operating costs low. These strategies focus on minimising labour, real estate and inventory costs.

Dollar store chains are aggressively expanding grocery assortments

In a bid to drive growth in foot traffic, the three major dollar store chains are taking steps to expand and improve their grocery offerings. This is placing increased competitive pressure on grocery retailers in the US, especially supermarkets.

While Dollar General thrives, Family Dollar underperforms

Dollar General, the leading dollar store player, has performed extremely well and continues to expand rapidly. Dollar Tree, a rival banner, has also posted strong growth, but the other chain owned by Dollar Tree Inc, Family Dollar, has struggled.

A smaller dollar store banner, Five Below, is making big waves

Although its sales and store footprint are much smaller than any of the major dollar store chains, Five Below – with its focus on the youth market – is a US retailer to watch, recording value sales growth of 25% in 2018.

Suppliers wishing to engage effectively with dollar stores must learn how they operate

Dollar stores can be difficult customers to deal with for many suppliers. Those that are best placed to engage with dollar stores profitably are those with the scale to fulfil massive orders. Suppliers should also note dollar stores’ preference for smaller product sizes, their private label ambitions and their pivot towards grocery.


Key findings
Variety stores are outperforming overall store-based retail in the US
“Dollar stores” are dominant in the US variety stores channel

The Enduring Appeal of Dollar Stores in the US

The three major US dollar store chains share a few defining traits
The key to dollar stores’ success is their unrelenting focus on value
Low overheads and limited assortments help keep prices down
The leading dollar store players have robust private label strategies

Grocery and E-commerce Initiatives

Dollar stores pivot to grocery
Dollar stores take tentative steps into the age of e-commerce

The Leading Players: Case Studies

Dollar General: the leader of the pack
Dollar Tree Inc, Dollar General’s chief rival, operates two banners
Dollar Tree: the “real” dollar store
Family Dollar: the laggard of the major US dollar store chains
Five Below: the rising star


Despite some challenges, the future looks bright for dollar stores
Dollar stores are turning up the heat on US supermarkets
With dollar stores ascendant, suppliers must adapt in order to thrive


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