Sense the Dollar Stores’ Appeal

The dollar store format has been doing well enough that all retailers should analyze how aspects of the format might work well for them.
     Dollar Tree, Family Dollar, and Dollar General have among them more than 20,000 locations. Dollar General alone has more retail stores than any other U.S. retailer. During 2012, Family Dollar opened 475 stores, and they plan to open about 500 more this year.
     According to Consumer Nation, the average annual income of a Family Dollar shopper is $40,000. The smaller retailer can emulate this appeal to the thrifty consumer with a bargain store format. But all retailers—including those catering to an upscale demographic—could benefit from incorporating some aspects of dollar store retailing:

• For the short term, market the functional aspects of whatever items or services you’re selling. People shop at dollar stores because saving money is functional. In recent months, Family Dollar has seen an increasing percentage of revenues from sales of consumable necessities and a lower percentage from sales of discretionary items. 
• For the longer term, mix the fun with the functional. The move away from discretionary items at the dollar stores might be a blip due to the January increase in payroll taxes, the upward costs of gasoline, and delayed federal tax refunds. Dollar Tree made lots of profits toward the start of this Great Recession by selling party supplies at low prices. Many of the Dollar Tree stores have freezers and coolers to stock grocery items and include among those grocery items fun alternatives such as ice cream. Researchers from New York University and University of Pennsylvania found that when people select a healthy item, they then become much more likely to select a fun item. In choosing a fun food item, they are still interested in the nutritional value. But they could be selecting the fun item because it’s not nutritious. 
• Include limited-stock, limited-time offerings. The dollar stores do this largely from necessity. They get a good deal on merchandise which suppliers are anxious to sell. The message is “Buy it now because it may not be here for long.” Even with higher-priced items, this fear of missing an opportunity motivates purchase behavior. Realize this is related to, but different from, the “treasure hunt” appeal, which says you’ll be surprised by what you find. Treasure hunts work best with unusual items. “Buy it now” works best with commodity items. 

Click below for more: 
Stock Your Cellar for the Perfect Storm 
Structure Your Layout for Shopper Mission 
Have Unannounced Discounts on Common Purchases 
Have Fun Items Throughout the Store 
Offer Scam-Free Scarcity