Axios reports that "premium brands — including Lunchables and Dunkin' — are spinning up variations for discount shelves, as dollar stores saturate the nation."
Here's how Axios frames the story:
"Inflation has pushed many consumers to discount and dollar stores for groceries and essentials, fueling a stunning surge in new dollar-store locations … America's dollar-store chain storefronts steadily increased between 2019-2023, with more than 34,000 in the U.S. last year — exceeding the total of all McDonald's, Starbucks, Target and Walmart locations in the country combined, per a recent study. In 2021, nearly half of the new stores that opened in the U.S. were chain dollar stores."
And so, major CPG companies - including Kraft Heinz and J.M. Smucker - are developing discounted versions of traditional items that will fit into a dollar store environment.
- KC's View:
So it now is a dollar store world and we're just living in it?
Depending on how things develop over the next few months, it may be even more so. This is the reality with which we are coping at the moment.
One question I would have is whether these discount versions will cause erosion of brand equity for the more traditional/expensive versions. I suppose it could be argued that they exist in different universes, with very little customer overlap, but I'm not sure.