A Glance at the Dollar Store Industry

The dollar store industry has experienced growth over the last five years, as operators adopt new strategies to sustain growth. Total dollar store industry revenue is forecast to increase an annualized 1.6% over the next five years, reaching $109.7 billion. The industry retails general merchandise at a discounted price. The discounted merchandise sold ranges from apparel, food, furniture and home goods.

Four Major Players In The Dollar Store

The dollar store industry is characterized by a high level of concentration, with the three largest operators combined anticipated to account for nearly 70.0% of industry revenue in 2022. While the industry is concentrated at the top, the remaining share of the market is mainly composed of small- to medium-sized operators catering to localized demand.

Dollar General comprises 34.6% of dollar store market share and annual growth has increased 9.6% in the last five years.
Dollar Tree comprises 26.3% of total industry revenue and an increased of 4.1% in industry revenue in the last five years.
Big Lots accounts for just 6.3% of total industry revenue and saw a 4.1% increase in industry revenue in the last five years.
Five Below only accounts for .3% of market revenue but has seen a 10.5% increase in industry revenue in the last five years

Factors to Consider When Investing in Dollar Stores

According to recent reports, the dollar store sector is experiencing significant growth thanks to its ability to provide affordable products during times of economic uncertainty. By understanding the market trends, you can make informed decisions on where to invest your money. Overall, the combination of these trends has driven growth.

Population: Population growth is an important component of industry growth. As the population increases, so does the number of potential industry customers. The population is expected to increase in 2022, representing a potential opportunity for the industry.
Location: Location is a key factor to consider when determining the potential for success. It’s important to choose a location that is in a high-traffic area and caters to the demographic that the store serves. For example, if the store is located in a low-income neighborhood, it should offer affordable products.
Demographics: The most substantial platform for change within the industry has been its customer base. While the industry has historically targeted low-income earners, this consumer pool has expanded in recent years to include middle-class and even some high-income earners.
Market Saturation and Competition: Further, expansion in industry product portfolios to include different categories, such as healthcare products, has enabled larger operators to compete with other discount retailers.

Products and Services of Dollar Stores

This segment’s share of revenue has expanded consistently over the last five years as dollar stores have added grocery products to their inventory. Recently operators started stocking national brands of food items as well as some private labels. To increase revenue with existing customers and to attract more foot traffic, industry operators continue to expand their product offerings. It’s interesting to take note of the current products and services to determine where the largest potential for growth may be.

Navigating the market for dollar stores can be complex, and working with a real estate professional can make all the difference. An experienced professional can help you understand whether a nnn lease is the right decision for you, and provide valuable insight into the market. With the right guidance you can confidently invest in the dollar store market and achieve your financial goals.

At Sands Investment Group, we specialize in helping investors find the right investment opportunities in the retail sector, including dollar store NNN investments. Contact us today to learn more about our services and how we can help you achieve your financial goals.