A new secret shopper survey brings to light the characteristics and habits of shoppers in one of the fastest-growing retail channels for licensed merchandise: dollar stores.
Amid strong overall sales and earnings growth for channel leaders Dollar Tree and Dollar General (see related story), U.S. and Canadian sales of licensed merchandise in the dollar/value/off-price channel grew 0.4% in 2015, according to TLL’s Annual Licensing Business Survey. This channel now accounts for just under 10% of licensed merchandise sales and was the fastest growing behind only e-commerce.
While the changes in market share are mostly very small, the dollars involved are not. With retail sales of licensed merchandise in the U.S. and Canada accounting for just over $103 billion in 2015, a one-tenth of a percent change represents more than $100 million, so the dollar/value/off-price channel grew by an estimated $400 million-plus last year.
According to “Dollar Stores in a Digital Age,” a new report from secret shopper and market research firm Field Agent, the Dollar General and Family Dollar chains alone account for more than 20,000 storefronts across the U.S., making them more ubiquitous than McDonald’s.
The company earlier this month surveyed 500 shoppers about their attitudes and behaviors toward dollar stores and found:
- Almost everyone sometimes uses dollars stores. 97% of respondents shopped at dollar stores, including: 34% often, 30% sometimes and 24% rarely.
- Older consumers use dollar stores more than younger consumers. 31% of millennials said they rarely or never shop at dollar stores, compared to 17% of baby boomers.
- People within a wide income range shop at dollar stores. 46% of shoppers with household incomes under $35,000 “often” shop at dollar stores; 30% in the above $50,000 income category also shop in the channel.
- The top product category purchased from dollar stores is heavily licensed.
Respondents said they purchase party supplies (56%) at dollar stores more than any other product category, with home cleaning supplies (56%), candy/gum (51%), office/school supplies (48%) and salty snacks (45%) rounding out the top 5.
The popularity of dollar stores hasn’t gone unheeded by mass merchant Target, despite its trendy position a ways up the retail food chain. The company near the end of 2015 made over its front of the store dollar section as the more brightly merchandised “Bullseye’s Playground,” featuring the store’s mascot, Bullseye the dog, and a family friendly selection of seasonal products.
At one of Target’s “LA25” concept stores in Culver City, Calif., last week that meant lots of $1 to $3 items tied to Disney’s Finding Dory, due in theaters June 3. The selection included books, coloring books, playsets, small toys, socks and other items. Minions, Frozen and Star Wars toys also could be found in the dollar section.
While movie merchandise once made it to dollar store shelves only after it failed to sell elsewhere, in the past couple of years entertainment licensors have begun to sign licensees to drive strategically low priced merchandise in the dollar channel at the same time that higher-priced merchandise goes into e-commerce, mass merchants, department and specialty stores.