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A new study from Information Resources Inc. (IRI) points to the increasingly significant role that dollar stores are playing in the retail world.

Some 56 million U.S. households patronized a dollar store in the year ended June 30, three million more than the year before, visiting dollar stores 11 times during that 12-month period. While 11 times a year hardly compares to the 100 or more times a year that people go to supermarkets, it is very close to the 15 times a year that the average shopper goes to a drugstore.

The reasons for this surge in interest?

1. The economy is in shaky shape, and consumer confidence is at a nine-year low…, which gets consumers thinking about saving a buck.

2. Improved SKU selection, with better brand names and a higher class of products.

There are three major dollar store players in the US: Dollar General, Family Dollar Stores, and The Dollar Tree.
KC's View:
It is hard for us to prognosticate about exactly how big the dollar store phenomenon will get. On the one hand, they continue to surprise…and there’s the added juice of knowing that Wal-Mart is flirting with the format. On the other hand, what happens when the economy gets better? Our guess would be that there’s a ceiling beyond which it is unlikely that the dollar stores can go…but you never know.

We’re willing to be surprised.