Despite analysts’ fears that dollar stores could become collateral damage in the price wars being waged between big retailers like Walmart and Kroger, sales forecasts for Dollar General and Dollar Tree remain strong. Dollar General expects net sales to increase by five to seven percent for the year ending February 2, and Dollar Tree expects a similar increase for the year ending in January.
In contrast, Walmart and Kroger anticipate low single-digit growth.
“The big advantage that dollar stores have is that, given their store footprint and the real estate they need, they can exist in small towns where Walmart or supermarkets are not going to go,” according to Euromonitor analyst Jared Koerten.
In an article last month, The New York Times said that dollar stores, which operate on razor-thin margins, are sprucing up stores, stocking more national brands, selling food and fresh produce, and opening more stores.
Moody’s analyst Mickey Chadha added that “dollar stores… also offer home products, seasonal products, electronics, apparel and accessories that are higher margin.”