DOLLAR STORES BECOME RETAIL'S HOTTEST GROWTH SECTOR

Dollar stores, and other small format value retailers, remain one of the hottest and highest growth sectors of retailing, reports Retail Forward in a recently released report., “Dollar Stores and Other Small Format Value Retailers.”

Dollar stores and other small format value retailers, including one-price general merchandise stores and closeout stores, are sustaining momentum as one of the hottest retail sectors of the decade.

“Dollar stores have posted some of the highest growth rates across all of retiling in recent years – largely due to rapid expansion, solid same store sales gains, and increasing consumer interest in the format,” comments Sandy Skrovan, author of the report and a Vice President with Retail Forward.

The small format value retail sector posted solid sales growth of 6.8 percent in 2002, following a year of exceptionally strong sales growth of 10.9 percent in 2001, Retail Forward forecasts another five years of solid growth for this industry sector as dollar stores continue to expand their way into the mainstream.

Another Decade of Viable Expansion for Dollar Stores Retail Forward estimates that there are enough untapped and underpenetrated geographic markets in the US to support 15,000 small format value retail outlets. In addition to new store expansion opportunities, solid same store sales gains are factoring into the growth equation as well.

“Leading players are driving store traffic and raising transaction size by adding more high-turn consumables and improving in-store presentation,” comments Skrovan. “And they are investing in the infrastructure - facilities, distribution networks, technology, and people – to help manage bigger businesses.”

Dollar Stores as Retail Change Agents Dollar stores have become retail change agents – changing the way America shops; changing the competitive landscape; and changing the way suppliers view the channel.

Changing the way America Shops The dollar store sector is gaining in popularity and market share as an increasing number of consumers recognize the price/value/convenience proposition the sector has to offer. Retail Forward's proprietary consumer database shows that thirty-six percent of US household shoppers shop the format monthly, up from 26 percent in 1997 – a clear indication that the sector is making its way into the mainstream shopping patterns of America. “Going forward, more formats, such as conventional supermarkets and drug stores, are likely to fall prey to the dollar daze,” states Skrovan. To squelch shopper defection and market share losses, Retail Forward expects more conventional players to integrate dollar concepts into their own stores.

Changes in Store for Suppliers By taking consumers and market share away from competitive retail formats, small format value retailing in creating the opportunity for more suppliers to cash in.

Retail Forward expects to see more manufacturers align with the dollar store sector to develop new products and dollar store items or special packaging that meet the specific needs and specifications of small format value retailers.