Variety stores are everywhere. Literally. Today, an American shopper can find a variety store within three miles of their home, according to a 2010 Credit Suisse report. Once known as 5 & 10 stores, variety stores offer a wide range of small, low-cost consumer essentials such as cleaning materials, household items, toys, and snacks, in a small retail footprint usually around 10,000 square feet. By offering big discounts on house brand, generic or off-brand items that sell for less than $10, variety stores promise the essential item no American shopper can pass up: a bargain.
Today variety stores are more commonly known as “dollar stores.” The store count of the four major “dollar” store chains, (Dollar General, Dollar Tree, Family Dollar and 99 Cents Only), outnumber that of traditional drug store retailers Walgreens, CVS and Rite Aid. By the end of 2013, Dollar General will be on track to open its 11,000th store. Family Dollar isn’t far behind, with 7,100 stores, and Dollar Tree’s management has plans to gradually roll out 23,000 stores.
What’s behind the rapid rise of the dollar store? Value. In today’s sluggish economy, the value, convenience, and ubiquity of variety stores makes them more appealing than ever to consumers watching every penny. While their consumer base tends towards the lower income brackets, consumers across the economic spectrum love the bargains these stores offer on every day items like toiletries, cleaning supplies, diapers, and groceries. That makes variety stores irresistible to investors, brands, and shopping center landlords alike.
Will the growth of variety stores continue to be sustainable? Many analysts assumed that while variety stores thrived during the recession, their allure would fade once the economy recovered. Apparently the dollar stores weren’t listening to the nay-sayers. Instead they reinvested their profits in sprucing up their stores with new coats of paint, making room for name brands on their shelves, and adding coolers and freezers so they could sell more food. What’s more, variety stores are increasingly taking market share from big box retailers who can’t roll out new stores as quickly, or in urban locations, where 10,000 square foot locations are the norm.
In 2012 shoppers spent $55.6 billion in variety stores. For manufacturers, variety stores represent an opportunity to get their brands in front of more consumers than ever. That is if they understand the factors driving purchase as well as perception. To thrive they must find a way to sell fewer items, at lower volumes, and at lower margins than at traditional retailers. Variety stores are more typically used for so-called “fill-in” trips: picking up just a few mid-week groceries on the way home from work, for example. Due to space constraints, variety stores tend to stock fewer products. Because price point is key, variety stores sell items for less. To be successful in this environment, brands will have to adapt to the economic logistics that rule the dollar store world.
Gigwalk can help brands get the most out of their dollar store sales. Whether it’s checking planogram compliance, reporting on out of stocks, or competitive price tracking, our mobile workforce is ready at a moment’s notice to help brands succeed in the variety store world.
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