The ICSC Blog

Dollar stores gain ground in U.S.

The U.S. is now home to more dollar stores than drugstores, according to a study by Colliers International. The brokerage firm says that as of mid-year 2011, the combined store count of the country’s four major dollar store chains – Dollar General, Dollar Tree, Family Dollar, and 99 Cents Only – has surpassed that of the three biggest national drugstore chains – Walgreens, CVS, and Rite Aid.

“The rapid evaporation of wealth, both real and perceived, has profoundly changed the way Americans shop and how they define value,” said Ann Natunewicz, national manager of U.S. Retail Research for Colliers International, in a press release. “Dollar stores now serve a larger consumer base, which is fueling unprecedented growth in dollar store leasing and a significant shift in the types of retail space they take.”

The four national chains – Dollar General, Dollar Tree, Family Dollar, and 99 Cents Only stores – now operate approximately 21,500 locations in the United States—more than the combined stores of the three biggest drugstore chains. Typical dollar stores occupy an average footprint of 7,000 to 10,000 square feet, although some newer prototypes exceed 20,000 square feet, Colliers says.

And there’s room for more growth, Natunewicz says. Supermarkets and other big-box tenants frequently restrict landlords from leasing space to dollar stores, she says. This trend is pushing dollar stores to locate into larger projects, lease in better-quality real estate areas, or to build new ground-up locations. “The convenience they provide—bringing better products at lower prices closer to the consumer—helps dollar stores to better serve existing customers and attract new ones. Retail is habit-forming; the longer shoppers patronize a particular store or category, the more likely it is to become a permanent shopping destination.”

Landlords in smaller markets often lease to a predominantly local tenant mix, so adding a large, national credit tenant such as a dollar store can reenergize a leasing effort and reassure lenders of a property’s viability, she adds.

For the complete report, click here.

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