Dollar and General Merchandise Stores
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 8,057 dollar and discount stores in the US sell a wide variety of merchandise at low, fixed price points, often in dollar increments. Merchandise includes everyday necessities and impulse items. By offering a limited number of items per merchandise category, firms maintain purchasing power and keep costs and prices low.
Low Prices Limit Flexibility
The value proposition of a dollar store is based on low, fixed retail price points (“Everything’s $1!”), which limit a company’s flexibility when costs rise.
Inventory Shrinkage and Theft
The operating model for dollar stores, which is based on small stores, crowded shelves overflowing with merchandise, a high number of cash transactions, and minimal staffing, makes operators vulnerable to inventory shrinkage and crime.
Industry size & Structure
The average dollar and discount store company operates out of a single location, employs about 67 workers, and generates about $9 million annually.
- The dollar and discount store industry consists of about 8,060 firms that operate over 45,000 establishments, employ 540,000 workers and generate about $75 billion annually.
- The industry is highly concentrated; the top 50 companies account for over 90% of industry revenue.
- Large firms include Dollar Tree (Family Dollar), Dollar General, and Five Below.
Industry Forecast
Dollar and General Merchandise Stores Industry Growth
Recent Developments
Jan 23, 2025 - Inflation, Employment Up
- Producer inflation for other general merchandise retailers, including dollar stores, increased 3.9% in November 2024 compared to a year ago, according to the Bureau of Labor Statistics (BLS). Employment by all other general merchandise retailers grew nearly 4% in October 2024 year over year while average wages for nonsupervisory employees increased 2.8% during the period. In December 2024, economic activity in the services sector expanded for the sixth consecutive month, according to the Services ISM Report on Business. The Services PMI registered 54.1% in December, up 2 percentage points from November. Nine of the 18 services industries reported growth in December, including the Arts, Entertainment & Recreation; Retail Trade; and Wholesale Trade industries.
- By the end of 2024, Dollar Tree is projected to have closed about 700 stores under its Family Dollar banner, according to a report in Retail Dive. In all, the company plans to close 970 underperforming Family Dollar stores, following a comprehensive store portfolio optimization review of current market conditions and individual store performance. Some closures will come at the end of each store’s current lease term. The company reiterated in its Q3 2024 results report that completing a formal review of strategic alternatives for its Family Dollar banner is a top priority, even though a deadline has not been set for the completion of the review process. The options include a potential sale, a spin-off, or other disposition of the business.
- Consumer confidence levels declined in December 2024, falling by 8.1 points from the previous month, according to The Conference Board. The Consumer Confidence Index was 104.7 in December 2024 from 112.8 in November 2024. Dana Peterson, chief economist at The Conference Board, noted that those remaining most confident on a six-month moving average basis confidence were those aged under 35 and those in the income category of over $100,000. Per Peterson, “The recent rebound in consumer confidence was not sustained in December as the Index dropped back to the middle of the range that has prevailed over the past two years.” Purchasing plans for homes decreased while plans to buy new cars and big-ticket items rose in December 2024 on a six-month average basis.
- A new study by the National Retail Federation (NRF) of the estimated impact of President Donald Trump’s tariff proposals shows the tariffs could increase costs of major consumer product categories including apparel, toys, furniture, household appliances, footwear, and travel goods. The study looked at the impact of Trump’s proposed universal 10-20% tariff on imports from all countries and an additional tax on imports from China. Per the study, consumers would pay $13.9 billion to $24 billion more for apparel, $8.8 billion to $14.2 billion more for toys, $8.5 billion to $13.1 more for furniture, and $6.4 billion to $10.9 billion more for household appliances with the proposed tariffs in place. The study showed the tariffs would have a “significant and detrimental impact” on the costs of a wide range of consumer products, in particular those products supplied primarily by China. According to Jonathan Gold, NRF vice president of supply chain and customs policy, “Retailers rely heavily on imported products and manufacturing components so that they can offer their customers a variety of products at affordable prices. A tariff is a tax paid by the U.S. importer, not a foreign country or the exporter. This tax ultimately comes out of consumers’ pockets through higher prices.”
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