By Sruthi Ramakrishnan and Siddharth Cavale
June 16 (Reuters) - Victoria Marin, a 35-year old author and
educator, used to spend hundreds of dollars at large party-goods
retailers on supplies that ended up in the trash can.
But a visit to the neighborhood Dollar General store, mainly
to stock up on cheaper paper napkins and plastic cups,
completely changed the way she shopped.
She realized the store was more like a small supermarket,
where she could buy groceries, Christmas decorations and even
apparel at much cheaper prices than at a Walmart (NYSE:WMT) or a Shop Rite.
Marin, whose gross annual family income is about $150,000,
said she would initially feel awkward about shopping at dollar
stores.
That perception, however, changed in the past few years for
thousands of shoppers like her as a shaky economy added a good
dose of prudence to household budgets.
"As years passed and my family grew, I realized I could buy
the same items at a dollar store for a fraction of the price,"
said Marin, whose family of six lives in upstate New York.
Marin is among a growing band of affluent millennials who
prefer spending less on everyday stuff and splurging on
big-ticket items like cars and homes.
They do not need to shop at dollar stores, which sell
products mostly priced between $1 and $10, but are increasingly
choosing to do so, a move that is reshaping the fortunes of many
retailers.
There is no fixed definition for millennials, but experts
usually define the term as referring to those born between 1980
and 2000.
Dollar General Corp (NYSE:DG) DG.N , the second-largest dollar store
chain after Dollar Tree DLTR.O , called out this demographic as
a key contributor to its revenue in its post-earnings call last
month.
Of the millennials who shopped at Dollar General, Dollar
Tree and Dollar Tree-owned Family Dollar stores, in the year
ended April, about 29 percent earned over $100,000 a year and
accounted for about a quarter of sales at these stores,
according to market researcher NPD's Checkout Tracking, which
tracks consumer receipts.
Dollar stores have worked hard to shed the image that they
cater to lower-income groups and have invested in retaining
customers who traded down from big retail stores after the
recession.
Stocking a wider variety of consumables, beauty products and
over-the-counter drugs, the interiors of dollar stores now look
very much like a Walmart WMT.N or Target TGT.N store.
"I get a lot of toiletries (at Dollar Tree), and those
aren't always name brands," said Eric Brantner, a 33-year-old
freelance copywriter who lives in Houston and makes roughly
$100,000 a year.
"For instance, the cotton swabs aren't Q-Tips, but they work
just as well and are less than half the price."
Also, the number of dollar stores has grown rapidly in the
last few years, often making them the nearest store in cities as
well as small towns.
Dollar General operates more than 12,700 stores in the
United States, while Dollar Tree operates about 14,000 stores in
the United States and Canada.
Nielsen data shows that the number of heads of households
under the age of 35 years who shop at dollar stores and earn
more than $100,000 a year rose 7.1 percent between 2012 and
2015, versus a 3.6 percent increase at all retail stores.
Dollar General and Dollar Tree both reported profits above
analysts' expectations for the latest quarter, in contrast with
weak profits at department stores such as Macy's Inc M.N and
Target.
Dollar General said millennials contributed about 24 percent
to its first-quarter revenue. This included mid and lower-income
millennials as well.
Dollar General and Dollar Tree declined to comment beyond
what they have said publicly.
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