Dollar and General Merchandise Stores NAICS 455219

Jan 19, 2026 - Value Shopping Boosts Dollar Store Outlook

• US consumer spending growth is expected to slow to about 1.5% in 2026, but the shift toward value shopping is likely to benefit the dollar store industry, according to Moody’s Ratings. As a cooling labor market, slower wage growth and rising costs for essentials pressure household budgets, consumers are increasingly trading down to lower-priced retailers. Moody’s analysts say value-focused retailers are poised to gain market share, a trend already reported by Dollar General and Dollar Tree, which have seen more higher-income shoppers in 2025. Dollar Tree’s long-term multiprice strategy is aimed at capturing this demand. Supporting the cautious outlook, Deloitte data from October shows shoppers across income levels planned to cut holiday spending. While overall spending growth will moderate, Moody’s notes stable unemployment among core middle-aged workers should help sustain traffic at dollar stores.
• Preliminary January 2026 data from the University of Michigan’s Surveys of Consumers show the Index of Consumer Sentiment rose to 54.0, up from 52.9 in December, marking the highest reading since September 2025 and a 2.1% monthly gain, though still about 24.7% below January 2025 levels. The Current Economic Conditions Index climbed to 52.4 (up 4.0 month over month, down 30.2 year over year) and the Index of Consumer Expectations rose to 55.0 (up 0.7 month over month, down 20.9 year over year). Year-ahead inflation expectations held at 4.2%, the lowest since January 2025 but above last year’s 3.3%, while long-run expectations ticked up to 3.4%. Director Joanne Hsu noted sentiment improved mainly among lower-income consumers but fell for higher-income households, with ongoing concerns about high prices and a softening labor market.

• US consumers plan to spend an average of $890.49 this holiday season, marking the second-highest total in 23 years and offering dollar and general merchandise retailers a strong opportunity to capture seasonal demand, according to the National Retail Federation and Prosper Insights & Analytics. Per the report, 42% of shoppers plan to visit discount stores, positioning them as a key destination alongside online, department store, and grocery channels. Of the total spend, $627.93 will go toward gifts, with the remainder allocated to food, decorations, and greeting cards. Early shopping remains popular, though 63% of consumers expect to make most purchases during Thanksgiving weekend. Retailers are responding with competitive promotions and value-driven assortments to meet demand amid economic concerns and tariff pressures. Gift cards and clothing top wish lists.
• While five services industries reported contraction in December, 11 industries reported growth, including the Retail Trade industry, according to an ISM Services PMI Report. Executives in the Retail Trade industry reported increases in business activity, new orders, employment, prices paid for materials and services, and inventories, along with decreases in new export orders, imports, and order backlogs in December. Other industries reporting growth during the period were Finance & Insurance; Accommodation & Food Services; Transportation & Warehousing; Arts, Entertainment & Recreation; Mining; Health Care & Social Assistance; Information; Wholesale Trade; Public Administration; and Utilities. Industries reporting contraction during the period include Management of Companies & Support Services; Professional, Scientific & Technical Services; Agriculture, Forestry, Fishing & Hunting; Educational Services; and Construction. Overall economic activity in the services sector continued to expand in December, registering 54.4%.