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If you want to save money, you shop at the local dollar store, right? That was certainly the case as recently as a couple of years ago, as prices soared and shoppers looked for the cheapest possible options. But dollar stores’ best days may be behind them now, with one new analysis saying they’d better consider a “readjustment” if they want to stay relevant in the year ahead.

The location analytics company Placer.ai tracks retail foot traffic to help gauge how popular certain stores are. And, with the exception of a pre-Christmas spike, its chart showing dollar stores’ growth over the past year displays an unmistakably downward trend.

The lead finding of its Retail Trends to Watch in 2025 report is that “conventional value” choices like dollar stores may have hit their growth ceiling. So following the same old playbook isn’t going to work for them, or their customers, this year.

From 2020 all the way into the beginning of 2024, Placer.ai’s data showed a steady increase in visits to discount and dollar stores like Dollar General and Dollar Tree. But “no category can sustain uninterrupted visit growth forever,” its report declared. That tracks with the dollar store chains’ financial performance, as their share prices soared during the pandemic but have since sunk below where they were before the pandemic.

Part of the problem is lingering inflation – dollar stores’ most frequent customers aren’t buying much of anything anymore beyond absolute essentials. And some of it is self-inflicted – dollar store chains opened too many stores too fast and are now having to scale back. They don’t have enough employees to properly run things, making for a messy shopping experience with unclean stores and understocked aisles. And they’ve fallen behind their larger retail rivals in building out a full-fledged online shopping experience, which many shoppers today have come to expect.

And with newly-imposed tariffs on imports from China, it could become even harder for the dollar stores to keep their prices down.

So what can the dollar stores do? Placer.ai calls the present situation “an opportunity for discount chains to rethink their offerings and operations.” First, Placer.ai suggests “fleet optimization” – otherwise known as slowing the pace of expansion and closing stores where necessary. Family Dollar owner Dollar Tree already announced plans last year to close nearly a thousand Family Dollar stores, as it considers selling off the entire chain.

Placer.ai also suggests the stores refresh their inventory with “new offerings,” or even look to “move upmarket” to capture higher-income spenders. Dollar General is trying to do the latter with its pOpShelf chain, while Dollar Tree is trying to do both by offering new products at higher price points of $3, $5 and up to $7.

And keeping the stores clean and tidy can’t hurt, either.

Ultimately, “value remains paramount for many shoppers,” Placer.ai notes. And retailers that “have found ways to let customers have their cake and eat it too – enjoy specialty offerings and elevated experiences without breaking the bank – have emerged as major visit winners.” While visits to dollar stores have slowed, visits to superstores and specialty grocery stores are growing. Retailers like Walmart and ALDI are stealing value-seeking shoppers away from the dollar stores, while Placer.ai says Trader Joe’s stands out “as one of the leading retail brands for innovative value,” offering high-quality specialty items at competitive prices. Unlike dollar stores, a retailer like Trader Joe’s can cater to shoppers who like low prices but don’t want to have an unpleasant shopping experience, or who like new and interesting products without having to overpay for them.

“Discount and dollar stores were some of the biggest beneficiaries of a shaky economic landscape,” Placer.ai’s report concludes. They’re “still extremely strong and well-positioned with focused offerings that resonate with consumers.” But they can’t expect to rest on their laurels. Dollar stores, the report states, “may be ripe for a readjustment” in the year ahead. And shoppers looking for clean, organized, affordable stores certainly hope so.

Image source: Random Retail

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