Both throughout and before the pandemic, stores like Dollar General (DG) – Get Dollar General Corporation Report and Dollar Tree (DLTR) – Get Dollar Tree, Inc. Report had been a way for buyers to fight inflation and obtain similar goods to what they buy at a supermarket at a lower cost — a situation that could soon change as many dollar stores (and discount stores like Dollar General) feel the brunt of rising prices.
Earlier today, the Bureau of Labor Statistics reported a 7.9% inflation rise for the month of February. This is a 40-year high unseen since 1982. That’s a number driven by increased fuel and automobile costs, but it has also impacted food prices — and dollar/discount stores have seen prices rise even more than their bigger rivals.
Household goods and grocery prices saw some of the highest spikes in prices at a respective 15.3% and 11.5%, according to even more broken-down numbers from the data research company Numerator.
Dollar Stores Are Feeling The Brunt Of Inflation:
Cheaper shopping options, in particular, are now seeing some of the starkest increases. Grocery costs at dollar stores spiked by 14.3% from 2021 and 22.5% from 2020. By contrast, online grocery store prices rose by only 12.4% from 2020.
At the same time, traffic at dollar stores and discount chains has been through the roof — compared to 2019, foot traffic rose by 20.4% at Family Dollar, 28.2% at Dollar General, 34.1% at Five Below (FIVE) – Get Five Below, Inc. Report, 3% at Big Lots (BIG) – Get Big Lots, Inc. Report and 13.7% at Dollar Tree.
While 45% of the American population earns below $50,000 a year in 2021, that number rose to 59% for Family Dollar shoppers.
Side by side, such numbers spell a pretty grim picture — already most affected by rising prices, low-income people who turn to dollar stores to offset rising food prices are being left more and more disappointed. To make matters worse, those classified as low income are paying 12.8% more for groceries than a year ago while those who are middle or high income are paying only 11.4% and 11.1% more.
Which Groups Are Feeling The Biggest Squeeze?
On a demographic level, inflation exacerbates existing inequalities — while Hispanic/Latino and Black buyers are now paying a respective 23.9% and 22.7% for groceries, Asian and Caucasian/White buyers are paying a respective 22.4% and 17% more since the pandemic.
Generationally, younger groups are also hit much harder. While Millennials, Generation X, and Baby Boomers are all feeling the inflation costs at the same 11.3%, Generation Z buyers are paying 13.5% more.
“Prices continue to rise across all channels and across all categories with household products seeing the most pronounced increases,” reads the report. “As prices rise, financial sentiment is declining overall, with Gen Z feeling the most squeezed.”
Dollar stores and heavy discounters like Dollar General have served as lifelines for people struggling during the pandemic (and struggling in general). They often offer goods, including food, in smaller quantities than what gets sold at traditional grocery chains. That allows a family to buy one meal at a time when that might be all their budget allows.
Dollar General, which has over 16,000 U..S. stores, also locations in areas not well-served by traditional chains. That makes the chain an important lifeline for many Americans.