
Discount stores have steadily gained popularity over the decades, and they could see a sharp rise in the next few years. Inflation has caused the cost of goods to skyrocket, and consumers are looking for prices that can give them some relief. While all retailers have had to raise rates, the gulf between a traditional retailer and a discount retailer has never been higher. The goliath poised to take advantage of this turn of events is Dollar General. The chain has existed for almost 70 years and is well known to bargain hunters who can find brand name products for pennies on the dollar. However, Dollar General is not the only game in town and other discount retailers, like Five Below, are expanding quickly to threaten Dollar general’s empire.
Dollar General originally opened in 1955 by J.L. Turner and Cal Turner, a father and son duo who had forged their business ideas in The Great Depression. The mantra behind the store was that no item would cost over a dollar. It was so successful that the duo converted all of their other stores to Dollar General and the brand generated sales of $5 million by 1957. The company went public in 1969 and was led by the Turner family until 2002. Products no longer cost under a dollar in their modern stores, although it is estimated that a quarter of products still fall in the under a dollar category. The commitment to provide consumers with reasonably priced goods has been a boon to the brand since the onset of the pandemic. Dollar General took losses like all retailers, yet their lower prices are still drawing in crowds. The company has set themselves up for aggressive expansion in the coming years and with retail prices still going up, consumers could be flocking to Dollar General en masse.
Despite Dollar General’s success, they do not have the discount dollar store market cornered. There is still room for new challengers and Five Below is ready to take up that mantle. Five Below got its start in 2002 when two friends developed a retail concept designed around discount goods for children. Five Below caters to a more specific audience with goods like clothing, arts & crafts, and candy. They lack the breadth of items that competitors carry, yet their commitment to serving their core demographic has pushed them to success. The company has also used their namesake to position themselves as a slightly more expensive dollar store that affords them the ability to offer a wider range of prices while still appearing as a discount. Other dollar stores have received backlash for the number of items on shelves that exceed the $1 advertisement, yet Five Below is not subject to the same perception. They have found a successful way to compete with the likes of Dollar General without vying for the exact same customer base and being a carbon copy.
The success of both Dollar General and Five Below represents the value that discount stores have in the current retail space. In particular, Five Below’s success indicates that higher priced discount stores that cater to specific demographics can gain a real foothold against competition that is well established. We should see more types of dollar stores popping up over the next few years as entrepreneurs attempt to capitalize on the inflation that has plagued other industries.