COMMERCE, Calif. — Fueled by strong store growth and increased household penetration, dollar stores have been stepping outside of their comfort zone in pursuit of consumer trips that have historically belonged to retail pharmacy.
For example, 99 Cents Only Stores on Tuesday promoted its stores as the cough/cold destination of choice for consumers this season. "99 Cents Only Stores understands that many people are unable to afford expensive medicines, vitamins and sanitizers to help protect against this particularly harsh strain of the virus," the dollar operator stated. "99 Cents Only Stores provides a one-stop shopping experience for your treatment and preventive efforts against the flu. For a buck each or less, 99 Cents Only Stores carry cough and cold medicines, flu fighters, vitamins, cough drops, hand soaps and sanitizers, tissue," the chain added. "Being on a budget does not mean that you have to be under the weather this season."
Whether it's promotions like these that are driving cough/cold consumers into the dollar channel, or the sluggish economy that has driven those consumers in search of greater values is unclear. What is clear is the dollar channel has been capturing more customers and more trips even as the drug channel loses both customers and trips.
According to Nielsen Homescan data published Friday, household penetration for dollar stores through mid-2012 stood at 66%, up from 59% in 2011. Conversely, drug channel penetration was 78%, down from 86%, for the same time periods.
"The dollar store channel, comprised of retailers like Family Dollar, Dollar General, Dollar Tree, Fred’s and 99 Cents Only, continues to expand channel shopper bases via new store openings," Nielsen noted. "These low-priced, limited assortment retailers are very entrenched among low-income households."