Dollar Tree leads the way for US convenience stores

GlobalData Retail 16 June 2020 (Last Updated June 16th, 2020 17:15)

Dollar Tree Inc. has been running small stores for many years. In 2015, the retailer saw immeasurable growth, in which it doubled its number of stores across the 48 states it currently operates in.

Dollar Tree leads the way for US convenience stores

Dollar Tree Inc. has been running small stores for many years. In 2015, the retailer saw immeasurable growth, in which it doubled its number of stores across the 48 states it currently operates in. However, since the novel coronavirus (COVID-19) outbreak hit the US, the company has undergone a number of modifications. In March, the retailer set out to hire 25,000 employees for its stores and distribution centers and set aside $30 million in wage premiums to recognize particularly hard-working staff. These actions helped to keep its employees on-board through the challenges presented by the COVID-19 pandemic.

US consumers are increasingly looking for ways to manage their frustrations now that current affairs in public health and political tension has come to effect so many people. To remedy the effects of feeling fed-up, consumers are expected to exhibit a more relaxed behavior in both their shopping habits and their own social distancing measures. This could potentially lead to another spike in infections, which would spur more customers to stock up on non-perishables once again, creating even more opportunities for Dollar Tree.

Combined with financial uncertainty and mounting debt, consumers in the US are facing draining energy levels that fuels stress and the need for fun. Gary Philbin, Chief Executive Officer of Dollar Tree, stated that Easter sales have taken a hit, although he went on to say, “we have seen a rebound on the discretionary side of the business following the Easter holiday, especially in crafts, graduation, stationery, Mother’s Day seasonal and balloons.” The retailers also reported that the party and candy categories are seeing growing popularity once more, indicating that families are returning to small stores to buy toys and other sundries on an impulse. Despite the unfavorable market conditions, Dollar Tree’s omnipresent branches are performing so well because consumers are ready for impulse buys. Once in the store to get essentials, it is easy to pick up extra items that would normally be found at specialist stores current closed due to lockdown began. This includes stores like Party City, where you would usually look for these types of non-essentials.

According to GlobalData’s COVID-19 tracker survey, whilst the proportion of US stockpilers in supermarkets has stayed the same, convenience and discount shops have since seen significantly fewer since the end of March*. In line with this, the discount retailer reported that Dollar Tree’s same-store sales had decreased by 0.9%, compared with an increase of 7.1% reported March 29. Now that the nation’s priorities shift away from public health and towards economic issues, Dollar Tree is returning focus to budget consumers. Dollar Tree’s ability to capitalize its emerging low-budget consumer base will be an important factor towards securing a reputation for getting a better deal than they might find at similar stores.

Including investments in pay and benefits, the distribution and transportation demand volume increase in consumables. What Dollar Tree has lost in the additional hours dedicated to enhanced cleaning protocol in stores, distribution centers and its store support center, it has clearly gained in the trust maintained with its clientele. With renovations set to resume after lockdown, it is likely that Dollar Tree will be looking to present an even greater threat to its independent competitors.