It’s dollar store week — Dollar Tree, Dollar General and Five Below will all be reporting quarterly earnings, after a year of tariffs, a government shutdown and many lower-income consumers continuing to struggle.
While all three of these stores offer a bargain, they’re each positioned slightly differently when it comes to shoppers seeking affordability over the holidays.
On Tuesday morning, the parking lot was fairly busy outside of a Dollar Tree in southwest Houston. Connie Bembry was getting in her car.
“I picked up some some anti-itch cream for my mom, and then, like, little essentials, like crackers and different stuff for the house,” she said.
She spent just $9, which is why she regularly shops at Dollar Tree.
“I just go in because I know everything is $1.25 so I just grab different stuff, and I don’t even look at the price,” Bembry said.
Dollar Tree has a wide consumer base, said Brett Rose, who went to the store twice last week.
“It doesn’t matter if you make $30,000 a year or $150,000 a year, you are loyal Dollar Tree customer,” he said.
Rose is CEO of United National Consumer Suppliers, which sells to Dollar Tree and other stores. He said it’s an advantage to appeal to different income levels.
“The retailers that can survive in that middle ground. It makes them economically safe … You just shift, right?” he said.
Dollar General is a different story. They’re more like a small supermarket, said Anthony Chukumba with Loop Capital.
“Dollar General’s core low-income consumer is stretched. They are still dealing with this accumulated impact of years of elevated inflation, the government shutdown, SNAP benefits were delayed,” he said.
Meanwhile at Five Below, which sells cheap toys, games and decor, there’s likely to be more holiday traffic.
“They definitely have a lot of gifts in their merchandise assortment,” Chukumba said.
All three do offer affordability. That’s important to a lot of consumers, said Morning Consult’s Kayla Bruun, but especially low-income adults.
“Our consumer health index is in negative territory for them. So that’s actually indicative of a contraction in spending,” she said.
While sentiment is up with the government re-opening, she said low-income consumers are still price sensitive.
