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Dollar Stores - Who Could Outperform?

Tali Rozenman
April 23, 2020
Dollar Stores - Who Could Outperform?

The coronavirus has certainly impacted all sectors of retail, some more deeply than others. But perhaps even more important than the short term impact is how well-positioned different sectors are for the day after. So we’ve been analyzing sectors like grocery, QSR and fitness to break down their current performance and post-coronavirus potential. 

This time, we dove into the dollar store category to see how it has been affected, and what its pre-pandemic performance indicates about the potential for a resurgence. 

Relative Strength Amid the Virus 

When looking at the nationwide performance of five major dollar store chains during the weeks affected by the coronavirus, we see some interesting results. Big Lots, Dollar Tree and 99 Cents Only experienced visit trends, on par with major retailers’ nationwide trends - a sign of strength in and of itself considering the strength of the grocery sector. Impressively, Family Dollar only saw a 6.6% year-over-year decline in the final week of March and returned to positive year-over-year growth of 1.2% in the second week of April. 

Even more surprising was Dollar General, which saw major year-over-year growth for the entire period. While Dollar General has certainly seen a boost from a location expansion perspective, the growth is still a significant barometer of its current performance and future potential. While the others all saw declines the last week of March and the first week of April, the brand experienced increases of 15.1% and 25.6% in weekly visits respectively. This indicates the major potential for Dollar General not only to come out of this crisis unscathed but to establish itself as the strongest competitor for these other chains. 

With a period of economic uncertainty a seeming inevitability, the clear orientation towards value could benefit this category. But even among the group, the first step to understanding the potential is looking at those already experiencing growth.

Positioning Among the Pack

Looking at year-over-year growth for the months of July 2019 through February 2020, there is great reason for optimism. Except for Big Lots, and a slight December dip for 99 Cents Only, all chains experienced impressive year-over-year growth. Even though most chains saw a seasonal dip during the month of January, all of them still show year-over-year growth during their weakest month, followed by a very strong February. 

In this strong performing group, one brand in particular stands out. Dollar General, once again, soars above its competitors for seven of the eight months, falling slightly behind Family Dollar in September. Big Lots, on the other hand,  lags behind with four months of traffic declines year over year, taking an especially significant hit during the holidays with a 5.3% year-over-year decrease in December traffic. And diving deeper into each brand’s performance helps explain why. 

Big Loss for Big Lots?

Looking at the period of January 2019 up to the third week of February 2020, other than a holiday peak in November and December, Big Lots shows a relatively flat trend. As mentioned, the peak itself is still lower than the previous year’s. 

For a store that so heavily relies on holiday traffic, the pandemic could be a dangerous blow -  especially if the COVID-19 effect lasts through the calendar year - making a bounceback far more difficult. Tapping into opportunities to attract traffic outside the holiday season could be key to sustaining this chain. 

Value of Loyalty

When it comes to customer loyalty, the number of visits per customer for a certain period of time can indicate a deeper relationship with the brand and its long term potential. 

Interestingly, while 99 Cents Only only starts to show positive baseline growth in September 2019, it has the highest customer loyalty of the group, with 5.6 visits per customer on average for the period. Unlike Dollar Tree, Dollar General, and Family Dollar, 99 Cents Only does not experience a major dip during the month of January, with traffic staying slightly low but steady into February. From the end of July, there is a steady upward trend, indicating this brand’s strength and potential to quickly bounce back in the coming months. 

In terms of customer loyalty, unsurprisingly, Dollar General comes in a close second with 5.4 visits per customer on average for the interval. The chain shows positive baseline growth for the majority of the period, positioning it as the strongest contender in the bunch. Additionally, its January low of weekly visits at 12.5% above the baseline, is much less serious than Dollar Tree’s 19.4% or Family Dollar’s 15.7% mark. This demonstrates Dollar General’s ability to maintain steady baseline growth, and avoid the same magnitude of seasonal dips.


While it’s difficult to predict the post-pandemic outcome of any sector, dollar stores seem ideally positioned because of their value orientation. Dollar Tree, while historically one of the strongest in the group, has been one of the hardest hit by the pandemic. Meanwhile, Dollar General and Family Dollar came into the outbreak in a strong position, and have managed to continue bringing in positive traffic amidst this uncertain time. The ability to minimize seasonal dips, and to resume a positive growth trend will ultimately be key to not only come out of this crisis on steady ground, but to continue thriving. 

For continued coverage on the COVID-19 outbreak and its implications, check back in at the blog.

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