Higher-income shoppers flocking to dollar stores amid economic uncertainty
From Yahoo Finance: 2025-06-04 12:18:00
Dollar store chains have seen an influx of higher-income shoppers amid economic uncertainty, with Dollar Tree reporting a 5.4% rise in same-store sales in the first quarter. Dollar General also noted increased trade-in activity from middle- and high-income consumers, with same-store sales growing 3.4% in the quarter.
Foot traffic to dollar store retailers surged in April as some tariffs took effect, according to data from Placer.ai. Dollar stores are benefiting from heightened economic anxiety due to evolving trade policies, with both Dollar General and Dollar Tree outperforming in weaker consumer and economic environments.
US private payrolls slowed significantly last month, indicating hiring hesitancy, according to a new report from ADP. Consumer confidence rose in May for the first time all year, reflecting some resilience in consumer spending habits, but with more discerning purchases being made.
Dollar General expects momentum to continue, driven by trade-in activity, especially if the macro environment remains conducive. Dollar General and Dollar Tree stocks have outperformed the S&P 500, Walmart, and Target, with both chains typically performing well in weaker economic conditions.
While Dollar General and Dollar Tree stocks have surged this year, up 45% and 18% respectively, Walmart and Target have seen mixed results. Dollar store chains have remained laggards over the past year, with shares down more than 20%.
Tariff uncertainty is bringing more customers to dollar stores, but Dollar Tree stock fell 10% as the company expects a profit hit due to rising costs from tariffs. Direct imports from China make up a significant portion of Dollar Tree’s total retail value purchases.
Dollar Tree and Dollar General have different exposures to tariffs, with Dollar General having lower exposure due to a higher percentage of sales in food items made in the US. Dollar General also imports less than 10% of what it sells, with less than 70% coming from China.