Why Dollar General Is Now Attracting Wealthy Shoppers
Wealthier individuals are suddenly shopping at Dollar General because of the strain inflation has put on their budgets.
With more than 18,000 stores in the United States, Dollar General is the go-to place for more than two hundred different types of items, from beauty products to home goods, and grocery items, all for a dollar or less. Dollar General has typically been a lifeline for shoppers with lower household incomes in rural areas where there are not many other options to choose from. As the cost of fuel, food, and monthly household expenses have gone up with recent inflation, so has the annual income of Dollar General shoppers.
CNN Business is reporting the core customers of Dollar General typically are those with a household income of $40,000 or less. However, as the cost of living has been driven upwards, so has the combined household income of the current Dollar General shoppers. Wealthier customers with an average earning of $100,000 a year are now finding themselves as regular Dollar General shoppers as they try and save money on discretionary and essential items.
During the COVID-19 pandemic, Dollar General began to notice customer sales across various income levels but this trend began to slowly decline until recently. And it’s not the only company benefiting from the shift in the demographic of customers. Higher-end restaurants are also seeing fewer patrons as previous customers are now eating out on a budget and choosing to dine at Applebee’s and IHOP instead.
Dollar General’s business rivals such as Walmart and Dollar Tree are also taking notice of far more customers with higher household incomes becoming more prevalent shoppers. Mike Witynski, the CEO of Dollar Tree said last month that the majority of the new customers making frequent purchases have annual household incomes of $80,000 or more annually. The Walmart CFO, John David Rainey told CNBC they too were seeing the same trend within the last month as most of their new customers have $100,000 or more combined annual household income.
In the second quarter of this year, Dollar General reported earnings of $9.4 billion. This is an increase of 9% from the same time frame a year ago with the retailer’s net profit seeing an additional 6% growth. All favorable numbers for the mega-giant retail store. The Dollar General CEO, Todd Vasos said on a call with financial analysts last week that the store’s increase in profits can be attributed to the higher-income household customers’ new shopping habits. Vasos stated that he believed it is reflective of the current state of the economy and that more consumers are seeking ways to save money. Dollar General has raised its sales forecast for the remaining two quarters of the year and continues to maintain a positive profit outlook for the final sales of 2022.
Many customers continue to purchase the bulk of their essential items at Walmart but are cutting corners where they can and switching to shopping at Dollar General for make-up, shampoos, and even school supplies. The recent bout of intense inflation has forced every household income type to seek ways to save a few pennies. Dollar General has increased inventory by 25% to ensure customers can continue to find potential savings without the stress of empty shelves.
