In May last year, I asked the musical question, "Can dollar stores survive an economic recovery?" The collective answer seems to be a resounding "Yes!" Not only are dollar stores surviving, they're thriving and, according to an article in the New York Post, that's forcing Walmart to compete with them for the lower-income shoppers that deserted them when the recession hit.
Several sources close to Walmart report that the company has begun vigorously demanding that suppliers provide the cheapest items in any given product category. That means pressing big partners like Procter & Gamble and Kraft Foods to produce smaller, more affordable packages for everything from diapers to laundry soap.Walmart will also be looking for new manufacturers who can deliver lower prices for cosmetics, party favors and greeting cards.
According to a recent survey of Walmart's vendors, Family Dollar and Dollar General pose the greatest threat to Walmart over the next five years. As reported earlier, Dollar General has plans to open 625 new stores this year, adding to the 9,200 stores already in operation. Family Dollar will open 300 new stores in 2011.
The fact that dollar stores have more convenient locations and smaller package sizes, appeals to lower-income consumers. And they're not sacrificing quality, either. Both Family Dollar and Dollar General carry some of the biggest brands around, including Tide, Huggies and Campbell's.
Even at dollar stores featuring items strictly $1 or less, you'll find brand name food, glassware and other household items like Sunbeam batteries. 99-cent Only Stores carry products from Kraft, General Mills, Unilever and Cadbury, to name just a few of its suppliers. And where else are you gonna get a five pound bag of potatoes for under a buck?
If dollar stores can do it, I presume Walmart can, too. When dollar stores first became popular, I noticed that some of the bigger stores made half-hearted attempts to lure shoppers with dollar deal aisles. But it wasn't necessary to their bottom line and the idea pretty much petered out.
Walmart will likely be able to stock items priced right for lower-income families but its large stores won't be able to replicate the relaxed atmosphere or thrill of the hunt that makes dollar stores a pleasure to shop in.
Marlene Alexander is a freelance writer and dollar store diva. She writes tips and ideas for home decorating using only items from the dollar store.
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Walmart Forced To Compete With Dollar Stores For Customers