America’s dollar stores get hot in recession

May 2nd, 2009 - 11:12 am ICT by IANS  

Washington, May 2 (IANS) America’s dollar stores, those once-dowdy chains that lures shoppers by selling some or all of their merchandise for just $1 or rock-bottom prices, have become suddenly hot in a recession-hit economy.
“They are busily opening new stores, outfitting existing stores with refrigerators and freezers, and sprucing up their aisles with better lighting, fresh paint and new signs,” the New York Times reported.

And while most big retail chains are closing stores and radically cutting back on new outlets, the dollar chains are planning to open hundreds of stores this year in some of the best locations to which they have ever had access, it said.

Dollar stores have long had a reputation for being down-at-the-heels places to buy cheap, generic goods. While keeping their low prices, they are revamping their image and climbing the respectability ladder - in some cases into the Fortune 500.

Dollar General, long part of that select club of the 500 biggest American companies, appears on this year’s list at No. 259, up 15 places from last year. And Dollar Tree landed on the list for the first time, at No. 499, the Times said.

Of America’s three major self-described dollar chains, Family Dollar and Dollar General sell many items for about $1 along with other merchandise that costs more.

Over the last year, another chain, Dollar Tree, tried selling items in some stores for more than $1, but sales were not impressive enough to keep the experiment alive. Today, Dollar Tree is back to being a dollar purist.

What the three companies have in common is strong sales growth in their most recent reporting periods - a feat in this economy, where most chains are posting declines.

To capitalise on the down economy, the chains are offering more groceries and household necessities - and giving those items more prominence in their stores, the Times said.

Some chains began making their food business a priority well before the recession hit - installing refrigerators and freezers so they could take market share from grocery stores; adding more name brands; and trying to make their stores more appealing by repainting them, improving the lighting and widening the aisles.

More dollar stores are also accepting food stamps, which is helping drive sales, the Times said.

Low prices are not the only reason consumers are flocking to dollar stores, though, it said. Some go because they can get a shopping fix without doing too much damage to their wallets.

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