If you want to know how low-income Americans are feeling, just look to Dollar General. Its CEO Todd Vasos said in the company’s earnings call this week that its “core customers” — people who earn under $40,000 annually — are struggling even more this year.
Customer traffic fell last quarter. But if you can’t afford Dollar General, where do you go?
Dollar General’s customers are struggling and end-of-month store sales are slowing, said retail analyst Matt Todd with S&P Global.
“Lower income households, who are their core customer, are running short on cash,” said Todd.
Plus, there’s inventory loss. Something called “shrink” is high.
“Elevated shrink, I think, is another sign of people struggling at the lower end of the income spectrum,” said Todd. “… third-party theft is the largest component of it. People stealing things.”
Dollar General’s CEO said customers have already cut out discretionary purchases. Now they’re going without some basic necessities, too — partly by having a more strict definition of “necessities.”
“The more income you have, the more we tend to consider things as necessities,” said Nick Pretnar from the Laboratory for Aggregate Economics and Finance at University of California, Santa Barbara. He says take something like fabric softener. Higher income consumers might call that a necessity.
“But someone who is lower income, they’re going to cut out something like fabric softener more quickly than, say, they cut out laundry detergent,” said Pretnar.
Pretnar said Dollar General won’t want to absorb price increases from tariffs, which means price-sensitive consumers who shop there might bear a higher share of that burden this summer.
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