In this Placer Bytes, we analyze Dollar General and Dollar Tree ahead of their upcoming earnings. The early sentiment? The value model looks to be a powerful combination of short term success and long term potential.
Dollar General Wages War on Dollar Tree
Dollar General is a brand that was seeing significant growth pre-Coronavirus before finding an even higher gear during the COVID pandemic. Visits in January and February 2020 were up 8.2% and 14.8% year-over-year. Though this paled in comparison to the 31.4% jump in March and the 19.2% jump in April, a massive year-over-year increase in a time when most brands were struggling.
But even more impressively, the visits don’t seem to be slowing down. In fact, the pace is picking up. The week from May 4th to 10th saw visits rise 30.4% above the weekly baseline for the period from January 2019 through May 11th, 2020. This was the second-highest week for the entire period, losing out only to the massive surge in visits in the ‘stocking up’ period in early March.
Dollar General saw year-over-year growth before the pandemic, during the height of the pandemic and as restrictions ease, new heights are seemingly in reach. The result is a brand that has managed to thrive during the crisis while being uniquely well-positioned for the economic environment inevitably to come.
Dollar Tree’s Performance
Dollar Tree also saw strong pre-COVID visit performance with year-over-year increases of 7.7% and 11.9% in January and February 2020 respectively. However, instead of jumps in March and April, the brand saw declines of 7.8% and 31.0% year-over-year. Clearly, these drops are understandable and the relative performance is still something to be admired.
And like Dollar General, the brand is seeing traffic surge back to ‘normal’ levels with visits the week of May 4th rising 21.1% above the baseline, the strongest week since Valentine’s Day week in February.
Competitive Perspective
Yet, Dollar General’s performance does seem to have some staying power. Customer Loyalty, measured by the number of visits per visitor, was 34.2% higher at Dollar General. Additionally, Dollar General performed better among less affluent audiences, a significant advantage in this sector, especially with the expectations of an economic downturn.
However, Dollar Tree does see a larger level of cross-shopping. While 48.0% of Dollar General visitors also visited a Dollar Tree since 2019, only 27.3% of Dollar Tree visitors have done the same. And the combination of a higher income audience with a high-value offering could still pay dividends enabling Dollar Tree to increase basket size, prices, or even its product range.
So how will the battle between the two Dollar value giants play out? Visit Placer.ai to find out.
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