Not long ago, a trip to the dollar store meant going on a treasure hunt through cluttered aisles not knowing what you would find: a cranberry-scented candle, a scratchy towel, a box of look-alike Oreos.
But in the last few years, dollar stores have been going through a makeover, adding refrigerators and freezers, stocking more food and cleaning up the presentation. As the recession hit, the dollar stores were ready with low-price groceries to attract a newly frugal middle class. And sales have soared.
Nearly half of all U.S. households shop at dollar stores each month, up from 36% in 2002, according to Retail Forward, a Columbus, Ohio, market research firm. Shoppers of all income levels are walking through the doors.
"It doesn't matter how much you earn, everybody loves a bargain," said Jeff Gregori, vice president of retail services at Nielsen Co., a suburban Chicago market research firm.
Shoppers with an annual household income of more than $100,000 reported an 18% uptick in spending at dollar stores in the second half of 2008 from a year earlier, a bigger gain than at mass-market discount chains such as Wal-Mart Stores Inc. and at warehouse clubs, according to a Nielsen report released this week.
Pasta, cheese, soup and dried grains appeared for the first time in recent memory among the 10 fastest-growing categories at dollar stores in 2008, the report found.
Griselle Rodriguez, 37, of Chicago said she had noticed a "lot more food and milk" at the Family Dollar store on North Elston Avenue in the city.
"They're putting a lot of food out," Rodriguez said. "That's a good thing."
Although they promote themselves as dollar stores, some of the retailers also offer merchandise that costs more, though very few items sell for as much as $10.
The three biggest dollar store chains all reported sales gains at stores open at least a year, a key metric of retail health, even as retail sales industrywide fell.
So-called same-store sales at Dollar General Corp., the largest of the three, rose 9.4% for the fiscal quarter that ended Jan. 30. At Family Dollar Stores Inc., the No. 2 dollar store, same-store sales rose 6.4% for the fiscal quarter that ended Feb. 28. And at Dollar Tree Inc., same-store sales for the fiscal quarter that ended May 2 climbed 9.2%.
At the same time, all three chains are expanding. Dollar General plans to open 450 stores this year. And Family Dollar and Dollar Tree plan to open more than 200 each.
