Rising Shopper Traffic Across Income Brackets
Americans’ economic worries may be good for business at Dollar Tree. People of all economic backgrounds are turning to Dollar Tree (DLTR) to stretch their budgets, CEO Michael Creedon said during a conference call on Thursday, bolstering sales and market share. The retailer’s traffic increased 0.7% and the average transaction amount grew 1.3% year-over-year for the quarter ended Feb. 1, according to Dollar Tree.
“It doesn’t matter how much money you make, everybody is hurting right now,” Creedon said, according to a transcript made available from AlphaSense. “The good news is: Dollar Tree and Family Dollar are a big part of that answer to what hurts.”
Middle-Income Households Fuel Core Growth
Dollar Tree is seeing more business come from higher-income households, while lower-income shoppers need the chain to make it between paychecks, Creedon said. He noted that about half of Dollar Tree’s shoppers are middle income, and they have traditionally shopped its stores’ seasonal and holiday merchandise.
“That’s our bread and butter,” Creedon said of middle-income households, according to the transcript. “They need us to live and celebrate their lives.”
Discount Retail Thrives in Economic Uncertainty
Other retailers are catering to consumers’ desire to save, including Dollar General (DG). Target (TGT) said late last year that it cut thousands of prices as customers grew “increasingly resourceful.” Americans are frequenting fast-casual joints instead of sit-down restaurants and buying smaller packages at the supermarket, executives said. Walmart (WMT) has seen growth in its higher-income clientele.
Dollar Tree said today that it estimates bringing in more than $800 million for selling Family Dollar to private-equity firms. Dollar General shares recently rose nearly 3%.