InMarket Details How Dollar Stores Can Reach More Customers and Win the Value Wars

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Dollar stores have traditionally been associated with shoppers on a tight budget, but they’ve recently gained traction with better-off Americans. This shift is part of a move toward value-driven shopping across all income levels as customers deal with rising costs that refuse to go away.

A recent InMarket report found that, from June 2022 to 2023, there was a 4% average increase in the share of visits to dollar stores like Dollar General and Dollar Tree from individuals earning over $100,000. This uptick was coupled with a 15% increase in wealthy households expressing a likelihood of shopping at these stores compared to the previous year, according to Morning Consult.

High earners who may have been more drawn to premium retailers and upscale brands in years past are turning to dollar stores for everyday items like cleaning supplies and basic food staples like eggs and milk. There’s been a subtle societal shift away from ostentatious spending and toward the cachet of a good deal, Michael Liersch, Wells Fargo’s head of advice and planning, said in a recent Wall Street Journal article.

“These days, it’s about making the most of your money and not getting ripped off,” he pointed out.

But even as more customers from a range of financial backgrounds embrace value shopping, there have been some stumbling blocks for dollar stores. Shoppers have complained about understaffing, as well as understocked and disorganized shelves. Some dollar stores have been forced to close locations and raise prices to deal with the pressures of inflation and supply chain issues. Prices are also rising as dollar stores seek to sell more products and expand category selections to appeal to consumers also seeking the convenience of one-stop shopping.

“Dollar stores have to figure out how to improve the customer experience and their overall value proposition in the face of rapid expansion,” Michael Della Penna, InMarket’s chief strategy officer said. “Understanding your customers’ needs and how to service those needs is marketing 101.”

Leaning Into Value and Convenience

As consumer behaviors remain unpredictable, it’s essential for discount and dollar stores to adopt customer-first approaches across their marketing efforts, from mobile ads to in-store customer experiences.

“For modern marketers, the secret sauce when it comes to attracting and retaining new customers is being able to understand their ‘why’ or what’s motivating them,” says Della Penna. “It’s no longer enough to rely on superficial characteristics about your audiences to inform your marketing campaigns. Consumers want relevant, personalized experiences that directly address their needs and to bring those experiences to life, you need to understand those driving motivations.”

InMarket, which empowers brands to create real-time, data-driven ad experiences, has worked with leading brands across the retail and discount categories to effectively meet the growing demand for value by combining enhanced analytics with real-time mobile technology.

In fact, in a recent study, InMarket found that value and convenience are the two top considerations for consumers when they’re making purchases.

“As they continue to expand their in-store offerings to create that one-stop shopping experience, one key advantage for discount retailers in retaining and attracting budget-conscious shoppers is the convenience they provide, alongside the lower cost,” adds Della Penna. “Particularly for younger demographics like Generation Z and millennials, the ability to purchase everything on their shopping list in one place significantly streamlines the shopping process and supports their more active lifestyles.”

It’s no surprise that there was a 6% increase in visitation share by Gen Z and millennial shoppers (18-34) to discount and dollar stores when comparing June 2022 to 2023, according to InMarket research.

Winning the Value Wars

Leading dollar chains like Dollar Tree and Dollar General have increased their product portfolio to include higher ticket items as they look to retain these price-conscious shoppers and better compete with big-box chains that are launching lower-cost lines.

“The competition is undeniably heating up,” says Della Penna. “On one hand, discount and dollar stores are launching slightly higher ticket items to create that one-stop shopping experience, while big-box retailers and grocery chains debut and enhance their low-cost lines like Target’s Dealworthy to regain those shoppers who left because of price.”

While some dollar and discount stores are having a difficult time balancing challenges like staffing, inflation, and supply chains while trying to meet this newfound demand and keep prices low, others, like Dollar General, continue to thrive. The company announced higher-than-expected earnings in March, and CEO Todd Vasos emphasized the impact of a shift to focusing on the basics of customer engagement and adding more private-label brands.

“The winners of the value wars will be the ones who both continuously adapt to meet their customers’ needs and ensure their unique value proposition is at the forefront of messaging across every touch point with their target audiences,” adds Della Penna.