The Changing Face of Retail…

Retail Space for Lease in Arizona

The past few years have brought about a significant change in the retail lineup in shopping centers across the nation… The top three dollar store chains are growing considerable market share at the expense of a spectrum of retailers. This is particularly interesting at a time when SuperValu (Albertson’s) and Tesco (Fresh and Easy) are seriously evaluating their respective positions within the grocery market. The dollar stores are rapidly expanding their footprint and filling their aisles with nationally known bargain brands that lure in both the low-income shoppers who have been Wal-Mart’s core customers and higher-income households now practicing thrift after getting hit hard from the last recession.

Dollar Tree, Family Dollar and Dollar General have all grown into pre-eminent dollar store chains that are chipping away at market share from a variety of other retailers. Although the dollar stores were once a complementary co-tenant with the leading grocery and drugstore chains, their free-standing prototypes are now penetrating all across the country.

Dollar General, the largest dollar store chain in the U.S., opened its 10,000th store earlier this year in Central California. The Tennessee-based chain has recently put a strong emphasis on Western expansion by adding 27 new stores in California and many more in the development pipeline. The chain currently operates in 40 states and the company plans to open another 625 stores in 2013.

Family Dollar, the 2nd largest chain, currently operates nearly 7500 stores and, like Dollar General, their aggressive growth plans include a net 500 new stores in 2013. The real estate strategies for Dollar General and Family Dollar are similar in that the sites they occupy are typically along primary arteries near low-income transit routes. This site selection strategy provides these two leading chains with impulse-oriented visits aimed to attract convenience minded consumers.

Dollar Tree is the 3rd largest dollar chain with around 4500 stores. The Virginia-based chain operates with a slightly different strategy in that their stores are typically located near a major discounter like Wal-Mart or Target. The products offered are very similar to Family Dollar and Dollar General. Their retail footprint is typically around 10,000 square feet, which is slightly larger than the prototypical Dollar General and Family Dollar stores.

The dollar stores provide customers with a convenient shopping experience and the size of the stores allows their customers to park near the front entrance and get in and out quickly. With a combined store count of over 22,000 units, these three retailers are now larger than many of the leading retail brands. With many more future units in the forecast, the deeply discounted sector is rapidly becoming a dominating segment of the market.

The dollar stores have carved out lasting differentiation by building and maintaining a repeatable strategy of providing necessity based products in a manner that serves their core customers better and more profitably. The essence of the dollar store sector’s competitive advantage has been their ability to provide tremendous scale and deliver the sharpest level of customer convenience. We look for their growth to continue even when the the recession is a distant memory.

For more information:

Phil Bramsen | Vice President

602.778.3774 |