business news in context, analysis with attitude

The Financial Times has a piece about how dollar store chains in the US "are getting a makeover as inflation drives more demanding middle-income consumers through their doors.

"The industry’s biggest chains have both announced plans to remodel almost twice as many stores as they will open this year. Dollar General and Dollar Tree will increase the number of refitted stores by 11.4 per cent and 25.6 per cent from last year, respectively.

"Both are investing heavily in freezers and coolers to meet growing demand for groceries from inflation-hit customers who have shifted more spending from discretionary items to essential items like food.

"The cost of remodeling and opening new stores will be considerable, marking out the chains from other retailers which are cutting costs and closing outlets. UBS analysts last week predicted that 50,000 US stores, or 5 per cent of the current total, could close by the end of 2027."

FT writes that "this is not the first time that economic strains have brought a new clientele to dollar stores. They saw an influx of customers during the Great Recession of late 2007 to 2009, and held on to most of them when the economy stabilised."

KC's View:

The challenge to traditional food retailers will be if dollar store chains, having gained traffic and market share during times of financial distress, are able to sustain that growth when the economy improves.