Nielsen: Dollar Stores Attract Upscale Crowd

High- and middle-income shoppers are increasingly turning to dollar stores, according to Nielsen Co. research presented today at Nielsen’s Consumer 360 conference.

Dollar stores, which had generally offered cut-rate items at a dollar price point, no longer live up to the name. Only 23 percent of items stocked at dollar stores cost a buck or less.

The increased variety of products and price points are drawing an expanded and more affluent consumer base to these inexpensive retailers. Households with incomes higher than $100,000 spent 18 percent more at dollar stores in the second half of 2008 compared to the year prior. Among low- and mid-income households, dollar stores are outpacing other major consumer packaged goods channels. Overall, 65 million consumers shopped at a dollar store last year.

“The troubled economy and rising costs in healthcare, education and food have caused everyone—even those with high incomes—to rethink where they purchase basic household goods,” said Jeff Gregori, vice president of retail services at The Nielsen Co., in a statement. “Today dollar stores are delivering more consistent selection and value.”

The most commonly purchase items are napkins, paper towels, detergent, trash bags and cleaning and laundry supplies. Among edible items, candy, snacks and cookies register the most rings.

Frozen prepared foods, non-carbonated soft drinks and prepared food (deli) were the top three growth categories last year. Dried vegetables and grains, pasta, charcoal/logs, cheese, shortening/oil, soup and carbonated beverages followed.
“With more shoppers having positive experiences at dollar stores, there is a significant opportunity for dollar stores and consumer packaged goods manufacturers to build loyalty and expand into new product categories, such as food and beverages and select health and beauty care,” said Gregori.

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