Written by Jon Mercer in Shopping
Viewed by 53 readers since 02-11-2009
With the US economy continuing to slump, consumer spending is down in most areas. But the news isn’t all bad: inexpensive retailers such as Wal-Mart and Dollar General Corp. are experiencing robust sales, even at a time when consumer confidence is low, and high-end retailers are hurting.
While Wal-Mart’s sales have been up slightly over the past several months, Dollar General experienced a whopping 11.2% increase in sales in the fourth quarter of 2008. Total sales for the company nationwide were reported to be $2.85 billion, up significantly from 2007, and resulting in one of the biggest same quarter sales increases in the company’s history.
Dollar General boasts over 8000 retail outlets throughout the United States, and is currently expanding to new areas. The company is planning to open 450 new outlets in 2009, and remodel approximately 400 of their existing stores, mostly throughout the American Midwest.
It’s no surprise that when times get tough consumers turn to inexpensive retailers. Even so, Dollar General’s 11% sales increase in the last quarter is astonishing to many industry analysts. Even mega-retailer Wal-Mart did not post such robust earnings in the fourth quarter of 2008.
But with consumers worried about the state of the economy and the loss of jobs, many families are curtailing all unnecessary spending, and making sure they get the most “bang” for their buck when they do go shopping. Stores such As Dollar General offer inexpensive, and mostly “off-brand” products at cheap prices.
While most of the stores are certainly no-frills (you won’t find any fancy decorating or product placement here), consumers see them as away to save a significant amount of money on their weekly shopping bills. Dollar General stores offer a wide variety of products, ranging from food items, milk and frozen goods, to clothes, cosmetics and household necessities. Like Wal-Mart, the majority of products found in the stores are of Chinese origin, and normally retail for about half the price of name brands.
With President Obama’s economic stimulus plan just now making its way through the Senate, consumers are taking matters into their own hands by choosing to shop at cheaper retail stores, instead of be high-prestige, high-price tag name brand outlets.
It is likely this trend will continue through 2009, as experts predict that the US economy will take time to recover from its current sluggish state, even with an effective bailout plan. For the time being, we can expect to see Dollar General, Wal-Mart and other budget retailers continuing to exceed profit expectations.