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
Mar 24, 2025 - Tariff Pain Could Hit Discount Shoppers
- Dollar and discount stores anticipate that core customers will curb their shopping expenditures in 2025 due to inflation and uncertainty from new Trump administration tariffs on Chinese and other goods. According to Dollar General CEO Todd Vasos in a March earnings call reported by CNBC, “Our customers continue to report that their financial situation has worsened over the last year, as they have been negatively impacted by ongoing inflation. Many of our customers report they only have enough money for basic essentials, with some noting that they have had to sacrifice even on the necessities.” Most discount retailers import many of their goods. Dollar General had to raise some prices when Trump imposed tariffs during his first term in office. According to Fast Company, Five Below imports 60% of its goods from China and expects to raise prices on some items that cost below $5 to offset tariff costs.
- According to a report in CFO Dive, consumer confidence levels, an indicator of discretionary spending, have fallen due to consumer anxiety about tariff effects and economic uncertainty. The consumer sentiment index from the University of Michigan dropped 11% in March 2025, marking the third straight month of declines and hitting the lowest level since November 2022. In addition, the Conference Board index of consumer sentiment in February 2025 marked the biggest decline since August 2021 and the third straight month of declines. According to Stephanie Guichard, senior economist for global indicators at the Conference Board, “There was a sharp increase in the mentions of trade and tariffs, back to a level unseen since 2019. Most notably, comments on the current administration and its policies dominated the responses.”
- 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.
- 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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