Retailer News / News

Analyst: Dollar Channel Gains Expected In Back To School

August 29, 2012

Planet Retail Research Analyst Katie Mathis details in a new report that the dollar store channel has made inroads in the back-to-school season against larger traditional retailers, and that she expects those gains to continue in the future.

Her report, issued last week by the London-based agency, says that the channel will continue to see gains, “stealing market share from the office supply stores that are already losing shoppers to big-box retailers.”

To combat the inroads made, she says, retailers “need to move beyond a pure-price focus to in-store experience and customer service to gain and retain customer loyalty.”

Dollar stores will be the focus of the September cover story of PLBuyer.

Among the positive signs for the dollar store channel in the season, Mathis says, were Matthews, N.C.-based Family Dollar’s claim that customers could buy all their school products for the year for $15, and the expansion into e-commerce by Dollar General and Family Dollar, including a text campaign by Goodlettsville, Tenn.-based Dollar General that provided additional coupons to shoppers.

Speaking exclusively to PLBuyer, Mathis says the seasonal gains were the continuation of trends in the channel since the recession began in 2008. And contrary to popular belief, Mathis says the dollar stores are getting stronger even as the economy sputters to recovery.

“Other retailers have to face the fact that dollar stores aren’t going anywhere,” she says. “I think people thought that once the recession was over shoppers would go back to their traditional stores and spending habits, but I think that’s really not what’s going to happen.

“If you look at the landscape, we’re in a really slow recovery, and they’re going to stick to the dollar stores, where they’ve gained loyalty … Now that they’ve grabbed people and gotten them to try their product and see that it’s better than they were, they’re creating a much bigger gap going forward for the other retailers.”

Mathis adds that the technological advancements made in the channel will put pressure on traditional retailers to find new ways to differentiate themselves from the dollar stores.

“They are really jumping on the technology bandwagon, where that used to be a distinguishing factor between large retailers and deep discounters,” she says. “Now technology isn’t the only thing that distinguishes (large retailers) from the dollar stores. They are doing texting and e-commerce. So while technology used to be a good set-apart, it’s not anymore.”

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