Seattle — The combined store count of the four major dollar store chains has surpassed that of the three biggest national drugstore chains, according to a new study by Colliers International.
Seattle — The American consumer has spoken: Dollar stores are now part of the national shopping habit. As of mid-year 2011, the combined store count of the four major dollar store chains — Dollar General, Dollar Tree, Family Dollar and 99 Cents Only — has surpassed that of the three biggest national drugstore chains — Walgreens, CVS and Rite Aid — according to a new study released this week by Colliers International.
The white paper, “Dollar Days: How Dollar Stores are Growing in a Weak Economy,” notes that the rapid expansion of this segment is part of the larger lesson learned by retailers during the recent recession: Consumers are looking for value.
“The rapid evaporation of wealth (both real and perceived) has profoundly changed the way Americans shop and how they define value,” says Ann Natunewicz, national manager of U.S. retail research for Colliers International. “Dollar stores now serve a larger consumer base, which is fueling unprecedented growth in dollar store leasing and a significant shift in the types of retail space they take.”
The four national chains — Dollar General, Dollar Tree, Family Dollar and 99 Cents Only stores — now operate approximately 21,500 locations in the United States — more than the combined stores of the three biggest drugstore chains. Typical dollar stores occupy an average footprint of 7,000 to 10,000 square feet, although some newer prototypes exceed 20,000 square feet.
Long known for the value they provide with convenience positioning, edited assortments, and low prices, dollar stores’ strong earnings and aggressive store expansion/remodel programs have made them extremely popular with landlords and property investors.
Other key findings include:
• Dollar store evolution = merchandising revolution: Landlords recognize that as long as trading down and pinching pennies stays fashionable, any and all merchants offering “value” have more cachet. Dollar stores have upgraded both the look of their stores and the merchandise presentation, increasing their appeal to a broader demographic.
• Savvy site selection = dollar stores go “main street”: Dollar stores are becoming a more accepted tenant and are moving into increasingly better real estate locations impacted by economy-driven vacancies.
• More aggressive real estate programs = accelerated absorption: Grocer and supercenters frequently restrict landlords from leasing space to dollar stores within a center they anchor. This trend is pushing dollar stores to locate into larger projects, lease in better-quality real estate areas, or to build new ground-up locations.
For more details into the insights and analysis on this new trend, a complete PDF version of the eight-page report is available for download by clicking here.
Colliers International (www.colliers.com) is the third-largest commercial real estate services company in the world and a subsidiary of FirstService Corporation.