These days, the phrase “value shoppers” describes a large market looking for ways to cut corners to make the monthly budget. Dollar store retailers are always seeking strategies to meet their market’s demands for value, while retaining the best possible margins.
National brands, combined with novelties and items which might otherwise be less accessible, are the stock in trade of the dollar giants. Consumers at these outlets are looking to stretch their dollars and for a location in which they can apply their buying power, especially when it comes to food.
They don’t care if what you’re offering is the latest craze, organic, or exotic. They want value and that’s about all.
Necessity more than novelty.
A key motivator of dollar chain store shoppers is the availability of necessities for a much more reasonable price than what’s offered at the grocery store. At a grocery store, shoppers will find a wider variety of any given product on offer. They will not, however, find the everyday value they do at the dollar chain.
Dollar chains strive to provide their customers (many of whom are living on fixed incomes, with very small grocery budgets) to the best range of food products they can because they know they’re filling a need. Instead of offering a vast array of breakfast cereals, for example, they’ll offer one or two in value-sized packaging.
This explains the trend in dollar stores toward expanded food aisles. Buying in large quantities, dollar chains can maintain steady inventories to meet the demands of the value shopper and to continuously provide what they’re coming in for.
A growing channel.
The dollar store is the fastest growing retail channel in the market. Every year, their rates of growth have increased. They now command more robust growth than conventional grocery stores by an average 2.5%.
What’s more, dollar store growth is projected to reach an annual rate of over 6.5% by the year 2020. What this is telling us is that reduced consumer buying power is propelling a trend toward value which shows no signs of slowing down.
The traditional retailer’s challenge.
What all this means is that traditional grocery retailers are compelled to respond. Diversifying inventory to meet the needs of shoppers with low and fixed incomes is a priority, if they’re going to compete with the growing, adapting dollar store giants.
Increasingly, these outlets are adding coolers and “market” sections featuring perishable and frozen items. Dollar outlets are being re-visioned as primary sources of groceries, instead of supplemental ones that fill the affordability gap.
Traditional grocery retailers, currently, are focusing on consumer demand for products which offer enhanced health benefits – fresh, organic and local are the watchwords of grocery chains now. On the dollar side, customers are seeking value that gets dinner on the table for as little money as possible.
To reach this market, traditional grocery outlets will need to adapt by offering similar affordability for shoppers with limited buying power.
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