3. Dollar stores thrive in distressed pockets of America
As rural America gets left behind by the rise of coastal superstar cities and the chasm between the richest and the rest widens, one entity is heavily profiting from the blight: the dollar store, Axios' Erica Pandey writes.
- Why it matters: Economic signs point to a coming recession, and America's discount stores, which have boomed even in the strong recent economy, will only grow more — becoming the sole retail option for an increasing share of Americans.
In the early 1960s, the bottom 90% of American households by income had the same wealth as the top 1% — 33% of the total. Today the bottom 90% has dropped to only 20% of the wealth, while the top 1% has raised its share to 40%, according to a paper by Edward Wolff, an economics professor at New York University.
- As the wealthy get wealthier and the middle class erodes, the retail industry is witnessing the simultaneous rise of cheap chains like Dollar General and luxury brands like Louis Vuitton.
The rise of dollar stores goes hand-in-hand with the decline of American malls:
- Stores that target middle-income Americans, like J.C. Penney and Macy's, have been rapidly losing their customer base. And dollar stores are picking them up.
Today, there are more than 30,000 dollar stores in the U.S., up from around 18,000 a decade ago, according to the Institute for Local Self-Reliance.
- That's more locations than Walmart, Kroger, Costco, Home Depot, CVS and Walgreens — the country's six biggest brick-and-mortar retailers — combined, Forbes reports.
- And the big dollar chains — Dollar General and Dollar Tree, which also owns Family Dollar — say they are adding about 1,000 more locations each year.
- The expected coming recession could mean even greater expansion.
- Investors love the dollar chains: Their stock prices are rising.
The stakes: Those who rely on dollar stores for food are exposed to overwhelmingly unhealthy diets, with choices that rarely go beyond processed and packaged snacks.
- At a Dollar Tree in Alexandria, Va., Erica saw that the shelves were stocked with Cheese Nips and Fudge Stripes, and that sodas were the only items in the refrigerators.