Dollar Stores Depriving Walmart Of Sales

Dollar stores have been depriving stores like Walmart of sales. During the recession, they lost a lot of business to dollar stores as lower-income shoppers deserted them in search of cheaper prices on everyday needs like food and personal care items. In 2010, Walmart's net sales increase was down to 1.0 percent from 7.3 per cent in 2009. In fact, these numbers have been decreasing since 2007 when the net sales increase was 11.6 per cent.

Considering that dollar stores were thought of as little more than junk stores a few years ago, chains like Dollarama have proven their worth with clean organized stores, great merchandise that includes bread and other packaged foods and helpful staff. For fiscal year 2010, Dollarama earned $1,253.7 million, a 15.4% increase over the previous year. Now that Dollar Tree has a foothold in Canada, having bought the Dollar Giant chain of stores last November, you can bet that things are going to get interesting. In the U.S., Dollar Tree is doing a booming business, having earned $4.16 billion by the end of the third quarter last year.

Jeff Doucette is the owner of Sales Is Not Simple, a retail strategy firm in Calgary. "I think that dollar stores in general are drawing consumers from a wide range of retailers including Walmart," he said. "Both Walmart and Loblaws have made half-hearted attempts at providing a "99 cent" offering but I think part of the beauty of the dollar store format is that it is a smaller footprint store, allowing you to explore quickly and get in and out."

It seems that many, many consumers are enjoying the atmosphere of the smaller stores. Certainly, a lot of us are still looking for the best value we can get and, when it comes to certain items, dollar stores really do have the upper hand.

"When you look at specific categories such as gift wrap, greeting cards, birthday supplies, holiday decorations, etc., I would venture that dollar stores have a higher market share than many of the big traditional retailers." Doucette said.

Marlene Alexander is a writer and dollar store diva. She writes tips and ideas for home decor using only items from the dollar store.

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