Holding on to Pandemic Gains
Five Below, unlike many of the other discount superstores, carries neither food nor groceries and was not open as an essential business in the early days of the pandemic. But the brand is more than making up for lost time now, with monthly visits up 32.7%, 36.9%, 25,7%, and 35.2% in April, May, June, and July, respectively, compared to the equivalent months in 2019.
Dollar General, which has been diversifying its store fleet by adding the new “popshelf” concept and expanding its grocery offerings under the Dollar General Market banner, also seems to be holding on to many of the new customers acquired over the pandemic. In April, May, June, and July, monthly visits compared to 2019 have increased by 25.9%, 20.2%, 25.3%, and 32.5%, respectively.
And while Dollar Tree, Family Dollar, and Big Lots may not be posting the same astronomical growth as Dollar General and Five Below, all the brands analyzed have been seeing year-over-two-year visit increases. Monthly foot traffic to Dollar Tree, Family Dollar, and Big Lots was up 10.1%, 3.1%, and 3.6%, respectively, in June, and 19.3%, 11.3%, and 3.5%, respectively, in July, against a 2019 benchmark.
More Stores Equal More Visits
Part of the current foot traffic increase - and the likelihood of its continuation - can be attributed to new stores. Five Below already added 120 stores in 2020, and plans to open another 180 by the end of 2021, and Dollar Tree, which also owns the Family Dollar brand, has announced plans to open 600 Dollar Tree stores and 200 Family Dollar stores in 2021. Big Lots has announced a net total of 21 new stores in 2021, and Dollar General opened around 1000 new stores in 2020 and plans to open over 1000 more in 2021.
Weekly visit data from the last couple of weeks indicates that the new stores are succeeding in attracting more customers. Visits to Dollar General, Dollar Tree, Family Dollar, Five Below, and Big Lots over the first full week of August were up 11.1%, 20.3%, 17.7%, 36.0%, and 1.1%, respectively.
And while Big Lots’s gains may look less impressive than those of the other discount leaders, keep in mind that the 2021 weekly visits are being compared to a particularly strong 2020. The discount retailer’s current weekly visit figures indicate that Big Lot is succeeding in holding on to its pandemic visit boost.
Visits Per Customer on the Rise
And while the larger store fleets undoubtedly contribute to the rise in visits, foot traffic data indicates that it is not the sole contributor – visits are also increasing because customers are returning to stores more often, a critically important sign of growing loyalty. The average number of visits per customer in May-July 2019 compared to May-July 2021 grew by 8.7%, 4.6%, 3.6%, 6.1%, and 2.0% for Dollar General, Dollar Tree, Family Dollar, Five Below, and Big Lots, respectively.
Crucially, the rise in visits per customer was not accompanied by a change in the median visit duration. This means that customers are not breaking up what used to be consolidated visits into multiple trips to dollar stores. Rather, the dollar and discount leaders are succeeding in drawing customers back to the store more regularly without sacrificing visit quality.
Growth While Consumer Habits Not Fully Back to Normal
Another key signal of the sector’s strength is that the across-the-board growth in visits is happening while consumer habits are still readjusting to the pandemic disturbance. As recently as June-July, the proportion of evening visits compared to morning and mid-day visits was still down for all the brands we looked at compared to June-July 2019. And while the shift from evening visits to morning and mid-day visits occurred across most retail sectors, other categories were not as successful in maintaining – let alone growing – the number of overall visits in the face of the disruption to consumer behavior.
The ability to draw more visits under changing and dynamic consumer habits is a testament to the strength and long-term potential of these brands. Ahead of a critical Back to School season, the discount superstores seem well positioned to capture a significant share of parents looking for bargains.
Will the discount superstore sector continue to thrive? Will consumers return to their pre-pandemic visit patterns?
Visit Placer.ai to find out.