Variety Stores in the US

PROSPECTS

Dollar stores continue to drive growth for variety stores

In the US, fixed-price stores – which are often referred to as “dollar stores” – were again the primary driver of sales growth for variety stores in 2018, allowing the channel to record one of the highest current value growth rates in store-based retailing.

Dollar stores’ focus on areas traditionally underserved by retail fuels outlet growth

Despite some industry observers warned that 2018 would bring a bricks-and-mortar “retail apocalypse” to the US, variety stores continued to open new outlets. Fixed-prices stores (dollar stores in the US) were responsible for the majority of new outlet openings, with leading players Dollar General Corp and Dollar Tree Inc pursuing aggressive store opening strategies.

Dollar stores move to expand their selection of groceries

In the US, dollar stores dominate value sales of variety stores, with the leading players continuing to innovate, most notably by constantly improving their product selections. Although dollar stores have historically been known for their selections of general merchandise, they are gradually moving to offer a broader assortment of groceries.

COMPETITIVE LANDSCAPE

Dollar General strengthens position as one of the most important retailers in the US

As the importance of variety stores grows across the US retail landscape, the reputation of the leading player Dollar General Corp grows with it. In 2018, it continued to gain value share within the channel while opening hundreds of new outlets, a feat rendered more impressive by the fact that the company was already the leader in the US retail space in terms of outlet count.

Dollar Tree weighed down by performance of Family Dollar banner

Dollar Tree Inc is one of the most important players in variety stores in the US, ranked behind Dollar General Corp in terms of value share and outlet count. However, although they hold similar value share, Dollar Tree’s current value growth was much lower than its rival’s in 2018; this could be related to its underperforming variety store chain Family Dollar, which it acquired in 2015 and is a fixed-price retailer with a sizable presence in urban areas.

Target sees potential in smaller-format stores in urban areas

In the US, Target Corp is best known for its big box outlets in suburban areas, and the retailer is typically viewed as the leading bricks-and-mortar competitor to hypermarkets giant Walmart Inc. However, although the majority of Target’s sales are through its large-footprint mass merchandiser stores, it has been garnering much attention for its new strategy of opening smaller-format stores in city centres and university towns.

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