The dollar store sector has been pulling off one of retail’s most interesting customer acquisition stories in recent memory. A recent article by RetailDive.com reported that chains like Dollar Tree, Dollar General, and Five Below have all seen real growth among higher-income households, a group that rarely set foot in these stores not long ago. Experts say this isn’t entirely surprising, though. Research has long shown that higher earners are actually quite deal-savvy, and are often more likely to seek out lower prices and promotions than you might expect given their income level.
Inflation was the spark that really accelerated this shift. As prices climbed across nearly every category, shoppers at all income levels started exploring stores they had never really considered before. Dollar Tree made a smart move in 2021 by breaking away from its single-price-point model and rolling out a broader multi-price strategy. That change helped protect margins while also bringing in shoppers who were used to places like Walmart but were now hunting for better value wherever they could find it.
The executives running these chains have been pretty open about what they’re seeing. Dollar Tree’s current CEO confirmed that the company added households across every income level, with higher earners showing a particular interest in its expanded product offerings. Dollar General’s CEO echoed that sentiment, acknowledging that value looks a little different to this newer, higher-income customer and that the chain is adjusting its approach accordingly. These aren’t offhand remarks either. They reflect real strategic decisions being made at the top.
Five Below, which has always sat at a slightly higher price point within the discount world, is riding the same wave. The company just posted its best holiday quarter since going public, with strong sales across multiple income groups and solid interest in products priced above five dollars. A recent consumer survey from EY-Parthenon backed this up, finding that dollar stores and everyday-low-price retailers saw some of the biggest traffic gains this past December. Interestingly, households earning over $100,000 were shopping dollar stores specifically for things like home decor, beauty products, and snacks, which are categories with strong margin potential for both retailers and their landlords.
For the commercial real estate sector, this is worth paying close attention to. Dollar store concepts that were once seen as neighborhood-specific, lower-income tenants are proving they can draw from a much broader and more economically diverse customer base. With ongoing macroeconomic pressures and potential gas price increases adding more uncertainty for consumers, the appeal of value retail isn’t going away anytime soon. Landlords and investors who may have passed on dollar store tenants in the past might find that the traffic counts, staying power, and customer demographics these retailers are now delivering tell a pretty compelling story.
