Dollar Stores Converging with Traditional Grocery and Mass Retail, New ChaseDesign Survey Reveals
Dollar stores continue to be the fastest growing retail channel today, both in terms of the number of new stores and the number of shopping visits. The deep discount sector is also the fastest growing retail channel for food purchases, with an 89.7 percent increase between 2008-2020, according to the American Public Health Association. The sector is focused on growing their grocery volume through increased store count and shopper visit frequency, with Dollar General adding more than 1,000 net new stores each of the last four years and Dollar Tree and Family Dollar averaged more than 100 each per year during the same period.
New research from ChaseDesign, the category growth design firm, provides insight into how and why dollar stores are capturing a larger portion of shoppers' grocery spend and what that means for retailers of all channels and brand marketers. Grocery is now the top category shopped in the sector, according to the 2023 ChaseDesign Dollar Store Channel Survey, followed by personal care and home goods. While food and related categories are the most shopped at dollar stores, trips to these locations are most often fill-ins for immediate need and not primary stock-up shops.
"Where people buy their groceries today is evolving quickly. Dollar stores are getting an increasing amount of their sales from packaged, fresh and frozen foods, and they're capturing those revenues from traditional retailers like supermarkets and mass merchants. This emerging competition needs to be top of mind for those retailers as they strategize how, when and where to engage their shoppers," said Joe Lampertius, President of ChaseDesign.
Lampertius adds there is mainstreaming of dollar stores taking place. In fact, shoppers say national brands are already about half of their purchases and they want more frozen foods (51%), more national brands (47%) and more beauty and personal care brands (35%). Rather than see these stores as a no-frills alternative to larger grocery stores, shoppers are looking for them to resemble their larger rivals more closely.
"A key challenge retailers in this space need to overcome is the way their stores are organized and how categories are presented, as many customers find the experience challenging to navigate. In fact, nearly three-quarters of respondents mentioned lack of organization, navigation and clutter as a challenge to their experience at dollar stores," said Lampertius.
Additionally, the digital experience of dollar stores is seen as less central to the shopping experience. A majority of shoppers never even use dollar store retailer shopping apps, nor do they order products online, which is quite different from the mainstream grocery and mass channels. This is a clear area of opportunity for the major players in this channel.
Other key findings from the 2023 ChaseDesign Dollar Store Channel Survey include:
- Dollar stores shoppers want more fresh and frozen foods (51%), national brands (47%) and beauty and personal care brands (35%).
- Dollar stores are often part of a repertoire when it comes to food purchases.
- 72% mentioned lack of organization, navigation & clutter/cleanliness as the top reasons they find shopping at Dollar Stores a challenging experience.
- The most frequent shopping trips to dollar stores are fill-in and immediate need.
- Typical transaction in the dollar store channel is $25 or less.
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Majority of shoppers never use dollar store retailers' apps.
- 15-22% (20% avg) didn't know the stores had an app.
- 35-70% (46% avg) never use their website (browser).
- Those shoppers using dollar store apps and/or websites are checking sales and specials, looking up product availability and price, using coupons or finding new products.
- Shoppers say Dollar Tree is easiest store to find items, while Dollar General is the easiest retailer to find items online and in the app.
- Half of the shoppers surveyed never order online with these retailers. If they do, they're picking up in store (36%).
- The top priorities for shoppers using a retailer's app and website include having good categorization, ease of search and smooth operation of technology. Yet 25% mentioned issues with finding products and product information, 24% mentioned bad overall experience and 23% mentioned technology problems like issues with searchability and glitches.
"The Dollar Store Channel Survey clearly shows customers in the sector want those retailers to offer a product assortment and a shopping experience similar to what they have come to expect at supermarkets and mass merchants. National brands can play growing part of the marketing and merchandising at dollar stores, and retailers can rethink the role of national brands, how products and categories are merchandised and presented, and making their digital experience more engaging and valued by shoppers," said Lampertius.
Note to Editors: The complete 2023 ChaseDesign Dollar Store Channel Survey is available. Please contact [email protected].
Methodology
ChaseDesign fielded an online survey in March 2023 through its proprietary research platform, mPulse, amongst 1,000 consumers between the ages of 25-54. Respondents were screened to be the primary or secondary shopper in their households.
About ChaseDesign
ChaseDesign is a category growth design firm that translates how and why people buy to create more persuasive branded & retail experiences as a catalyst for incremental growth both online and in-store. Capabilities of ChaseDesign span research, strategy, retail experience design, full prototyping and end-to-end activation. ChaseDesign is part of McCann, with offices in NYC, Detroit, Syracuse and Cincinnati. Learn more at www.chasedesign.net or follow us on LinkedIn.
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