During and before the pandemic, stores like Dollar General (CEO) – Get the Dollar General Corporation report and Dollar Tree (LTRD) – Get the report from Dollar Tree, Inc. has been far for shoppers to fight inflation and get goods similar to what they buy at a supermarket at a lower cost – a situation that may soon change as many dollar stores (and discount stores like Dollar General) are bearing the brunt of rising prices.
Earlier in the day, the Bureau of Labor Statistics reported inflation rising 7.9% for the month of February. This is a 40-year high not seen since 1982. This is a figure driven by rising fuel and car costs, but it has also had an impact on food prices – and dollar/discount stores saw prices rise even more than their biggest rivals.
Prices for household goods and groceries saw some of the biggest price increases at 15.3% and 11.5% respectively, according to even more decomposed numbers from data research company Numerator.
Dollar stores bear the brunt of inflation:
The cheaper call options, in particular, are now seeing some of the biggest increases. Dollar store grocery costs were up 14.3% from 2021 and 22.5% from 2020. In contrast, online grocery prices were up only 12%, 4% compared to 2020.
At the same time, traffic at dollar stores and discount chains has exploded – compared to 2019, foot traffic increased by 20.4% at Family Dollar, 28.2% at Dollar General, 34, 1% at Five Below (FIVE) – Get the Five Below, Inc. report.3% on large lots (FAT) – Get the report from Big Lots, Inc. and 13.7% at Dollar Tree.
While 45% of the US population earns less than $50,000 a year in 2021, that number has risen to 59% for Family Dollar shoppers.
Side by side, such numbers paint a pretty bleak picture – already the hardest hit by rising prices, low-income people who turn to dollar stores to offset rising food prices are increasingly disappointed. . To make matters worse, people classified as low income pay 12.8% more for groceries than they did a year ago, while those in middle or high income pay only 11.4% and 11.1 % what’s more.
Which groups feel the most pressure?
Demographically, inflation is exacerbating existing inequalities – while Hispanic/Latino and Black shoppers now pay 23.9% and 22.7% respectively for groceries, Asian and Caucasian/White shoppers pay 22, 4% and 17% more since the pandemic.
Generationally, younger groups are also much harder hit. While Millennials, Gen Xers and Baby Boomers are all feeling the costs of inflation at the same 11.3%, Gen Z shoppers are paying 13.5% more.
“Prices continue to rise across all channels and categories, with household products seeing the most pronounced increases,” the report read. “As prices rise, financial sentiment declines overall, with Gen Z feeling the most squeezed.”
Dollar stores and big discounters like Dollar General have served as a lifeline for those struggling during the pandemic (and struggling in general). They often offer products, including food, in smaller quantities than what is sold in traditional grocery chains. This allows a family to buy one meal at a time when that may be all their budget allows.
Dollar General, which has more than 16,000 US stores, as well as locations in areas underserved by traditional chains. This makes the chain an important lifeline for many Americans.