NEW YORK - While dollar stores have proliferated during the recession, an increasingly crowded marketplace and dim economic outlook may hamper their growth prospects, the Wall Street Journal reports.
The three largest U.S. dollar stores, Dollar Tree, Dollar General and Family Dollar Stores, have a combined 20,000 location in the U.S. However, their core demographic — lower-end-shoppers — are feelingly greater financial concerns as unemployment continues to hover at nearly 10 percent and signs of economic recovery appear dim. Those factors are expected to pressure margins, anathema for dollar store retailers who lure customers in with bargain prices on food and drinks, yet rely on higher-margin discretionary purchases for their growth.
As a result, investment firm William Blair & Co. predicted that expiring jobless benefits could cut up to three percentage points off Family Dollar's sales growth for next year. And as Walmart opens smaller-format stores, the pressure on dollar stores appears formidable.