Dive Brief:

• Thirty percent of survey respondents shop at dollar stores more often today than they did one year ago, according to research by Ripple Street sent to Food Dive by email.
• Nearly 80% spend $11 to $50 every time they visit a dollar store. 
• Twenty-five percent of customers at the three biggest dollar chains are millennials from households earning over $100,000, according to checkout data gathered by the NPD Group.

Dive Insight:

The survey confirms the growing trend: A broad range of consumers are shopping at dollar stores more often. They are also spending a significant amount of money in those stores — whether on seasonal items, cleaning products, arts and crafts, and food. A first food purchase in a dollar store might be on impulse, but return visits to save money tend to make the dollar store a destination.

Grocery retailers are taking dollar stores and other deep discounters more seriously. Dollar stores are stocking more food items for customers of all income levels seeking a “treasure hunt” experience, or just a convenient place to buy fill-in items. Lower income shoppers — including those on the Supplemental Nutrition Assistance Program — may come to dollar stores to buy low-priced items to stretch their budget, but after finding food products there, could spend less at the traditional supermarket.

Dollar chains with larger footprints, like Family Dollar and Dollar General, now offer a variety of discounted merchandise, including groceries and household goods. Chains firmly committed to the $1 price point, like Dollar Tree, are increasing their food selection, but it is limited because of the price. Other discounters like Big Lots and Ollie’s Bargain Outlet also have several aisles of food, though many of the items may not be stocked consistently.

The food products and the merchandising customers find in the dollar stores are improving, too. CPG manufacturers are offering dollar-sized packaging and more brand name merchandise than they had before.

Dollar General is putting pressure on small-town grocers with its 14,000 stores and aggressive expansion plans. By the end of the year, the chain wants to open 900 stores and carry fresh produce in 450 of its stores. Dollar General is also remodeling snack and beverage aisles because of customer demand, and plans to offer more healthy options including low-sodium and protein-rich selections.

Family Dollar, which is owned by Dollar Tree, is rolling out new store layouts and private label brands. The new layouts include expanded snack and beverage selections. The company said initial consumer reaction to the cleaner stores and better merchandise was positive.

The survey underscores these moves good investments for the discounters. As for large grocery chains, the onus is on them to show shoppers their continued value and continue to assert their position as the major destination for shoppers' trips.