Prices are skyrocketing nationwide, and El Paso’s discount retail stores are taking the opportunity to expand and attract more cash-strapped shoppers.
Foot traffic at discount stores in El Paso from January through May was up about 20% from the same time last year, according to data provided by Placer.ai, a location analytics company.
“The impact of inflation and rising gas prices creates an added advantage for value-driven retailers,” said Ethan Chernosfsky, vice president of marketing at Placer.ai. “Combine that with their current popularity and expanding market footprint, and the opportunity for these segments is very significant.”
Discount stores like Ross and Five Below, as well as dollar stores, are growing particularly rapidly in the border region. Data shows that visits to discount stores in El Paso in May were up 17.6% from a year ago, about double the growth in visits in the state and nation.
Placer.ai uses mobile device data to analyze customer behavior for retailers and other businesses.
Five Below, a national chain of discount stores, has grown throughout the city. Its newest location opened at Farah Fountains a year ago. Dollar Store and Family Dollar have over 70 stores in El Paso.
Adam Frank, president of real estate developer River Oaks Properties, says the El Paso retail market has always been a hidden gem.
“A lot of people don’t know how big sales are because it’s very difficult to quantify sales to Mexican consumers,” he says.
Tom Fullerton, an economist at the University of Texas at El Paso, says the retail economy in El Paso is so important because it attracts shoppers from neighboring Mexico and New Mexico.
“El Paso follows a lot of customer traffic from northern Mexico and also from southern New Mexico,” he says. “There is more retail activity per capita (in El Paso) than there is typically in most other Texas metropolitan economies.”
David Kaufmann is the owner of the El Paso-based Black Fridays discount store chain. His business model, he says, was new to El Paso when he opened the first store in 2019. He now has four locations, including one in Denver, Colorado.
Its stores have fixed prices on specific days. They range from $1 on Wednesdays to $15 on Fridays when new products are stocked. Customers often line up before the doors open each morning to grab the best produce.
“We saw a great opportunity,” says Kaufmann. “We saw other people outside of the area doing this and thought El Paso would be a great place to bring this (business model) to.”
He says his products come from large, overstocked warehouses like Costco, Sam’s Club, Walmart and Amazon.
Another factor behind the popularity of discount stores is the area’s median household income, according to Andy Moreno, vice president of commercial real estate developer Mimco of El Paso.
“With El Paso’s median household income trailing the national average by $15,000 to $20,000 historically, it’s only natural that national discount retailers such as Dollar Tree, Ross and newcomer Five Below will continue to grow their presence in Sun City,” Moreno said.
He expects the discount store trend to continue.
“With soaring inflation and continued uncertainty about the economy, I’m sure earnings reports from discount retailers will be one of the few bright spots in the markets as we head into the second half of 2022,” he said.