In the face of rising inflation, two of the country’s largest dollar-store chains are seeing wealthier customers flock to them for lower-cost goods.
Dollar Tree and Dollar General both saw increased sales and profits in the most recent quarter, and both have noticed an increase in high-income customers.
In a conference call with analysts, Dollar General CEO Todd Vasos said that the company has seen an increase in higher-income families shopping there, “which we feel reflects more customers choosing Dollar General as they seek value.”
Dollar General’s sales was $9.4 billion in the second quarter, up 9% from the previous year, while the retailer’s net profit increased by more than 6%.
Vasos noted that Dollar General saw signs that its core customers are “shopping more intentionally and closer to need” by sacrificing some food options.
Dollar Tree CEO Mike Witynski stated that the majority of the chain’s new customers in the last year came from households earning $80,000 or more per year. He also stated that the store is seeing an increase in the use of credit cards rather than cash, indicating that customers are feeling stretched.
Customers are “feeling pressurized like they’ve never felt before,” according to Witynski, and with inflation, “our consumers are counting on our shops to satisfy their financial objectives.”
Dollar Tree’s revenue increased by 7% to $6.8 billion, while its net profit increased by 27%.
As inflation eats deeper into budgets, wealthier consumers are turning to dollar stores for lower-cost alternatives. Both Applebee’s and IHOP saw an increase in wealthier customers, who typically dine at more expensive restaurants. Chipotle, too, experienced an increase in sales among its higher-income consumers, who make up the bulk of its client base, while Walmart has ascribed 75% of recent market-share gains to customers earning $100,000 or more.