Dollar Tree’s Consumables Strike a Chord with Affluent Shoppers

As consumers increasingly change their buying habits toward consumables, Dollar Tree appears to be profiting from this trend. Customers see Dollar Tree and Family Dollar as appealing places to make value-driven purchases.

During the retailer’s first-quarter earnings call on Thursday (Aug. 23), CEO Rick Dreiling noted that Dollar Tree utilizes a multi-price strategy to adjust to evolving customer preferences. Meanwhile, at Family Dollar, the company has noticed an enhanced pricing perception and the favorable effects of varied merchandising efforts on consumer engagement.

In light of this, it resonates with the present pattern where shoppers spanning different income ranges increasingly highlight the importance of value. The food segment notably drives the upward sales trajectory within the value retail sector. Dreiling said this trend was evident in the performance of Dollar Tree and Family Dollar, where their food divisions prosper, particularly in the frozen and center-store food categories.

“Our food business is especially well positioned in the current environment, and we are seeing extremely high volume growth across our frozen and center store food categories,” he said. “There is also growing evidence that consumers are seeking value through private brands. Expanding and improving our private brand assortment will be a significant growth vehicle for us going forward.”

Regarding the acquisition of new customers, Owen highlighted Family Dollar and Dollar Tree’s significant contribution to boosting footfall and capturing market share.

“In the past year, we have added nearly 5 million new customers across both segments, with 2.6 million of these customers having a household income over $125,000,” Dreiling said.

Furthermore, they tend to visit stores approximately five times within the year subsequent to their initial visit.

In June, PYMNTS discussed dollar stores’ new attraction from wealthier consumers noting that there was no longer a stigma attached to shopping at the dollar store. This was evident as research conducted by PYMNTS at the time revealed that 16% of individuals with higher incomes were facing difficulties in settling their bills. Meanwhile, 34% were living paycheck to paycheck but encountered no problems in meeting their monthly financial obligations.

The research conducted by PYMNTS has also discovered that, in total, half of those earning $100,000 per year admit to living paycheck to paycheck.

Read more: Dollar Stores See Influx of Wealthy Consumers as Inflation Persists

In line with this, Dollar Tree is actively exploring additional avenues to connect with consumers seeking value. The company is poised to broaden its Dollar Tree Plus selection, extending its presence to 4900 stores by the end of the year, a notable increase from the initial plan of 4300 stores.

As of the end of the second quarter, Dollar Tree Plus products were available in over 3,600 locations, and the assortment of frozen and refrigerated goods priced at $3, $4, and $5 was accessible in nearly 5,600 stores.