Recession where? According to a study by consumer tracker Placer.ai, dollar stores returned to year-over-year visitor growth as early as the week of August 3. Industry watchers expect continued demand for thrift stores as shoppers tighten their budgets.
As of the week of August 3, visits to Dollar General increased 22% from the week of the previous year, and Family Dollar also saw a 5% increase in visits. Retail chain Five Below eventually crept from negative year-over-year numbers to a nearly 2% increase in the week of August 3rd. Similarly, Dollar Tree outperformed the first week of August 2019 by nearly 1%.
While a formidable rebound that many retail sectors currently cannot claim, Dollar General was the clear leader, wrote Placer.ai. Dollar General has been named an "emerging retail giant" by Placer.ai as monthly visits also increased 17% in July 2020 compared to July 2019. The number of visits in July rose gradually, after 14% and 13% compared to the previous year, with further growth in June and May, respectively. Family Dollar, which was acquired by Dollar Tree in 2015, also reported an increase in monthly visitor numbers, if only by 0.4%.
However, dollar stores are affected by COVID-19. July visits to Five Below were down 2.9% year over year. Likewise, there were 2.7% fewer visits to Dollar Tree stores in July 2020 than in July 2019. However, Placer.ai found these decreases were significantly less than Walmart's 13% decrease in visits in July year over year.
Dollar stores are likely to become a "significant asset" for more shoppers as the economic uncertainty of COVID-19 and tight budgets lag through 2020 and possibly 2021, Placer.ai wrote. As its popularity increases, so do the leasing options for the dollar store sector.
Boulder Group President Randy Blankstein told Globe.St.com in late July that the dollar store sector is receiving a 73 basis point discount on the total net rental market due to increased value demand in response to the coronavirus. Investors viewed the dollar store sector as safer than its other traditional competitor – fast food restaurants (QSR), Blankstein said.
"Much of the competition at this price has historically been against QSR, and QSR hasn't added as many new locations," said Blankstein. "The problem with QSR right now is that people don't want smaller franchisees. They all want either company-owned businesses or large franchisees."