How 2020 Paved the Way for $5-and-Under Retail

How 2020 Paved the Way for $5-and-Under Retail

Popshelf, Dollar General’s new retail store for $ 5 and under, has dispelled any notion that brick-and-mortar chains are on the way out. According to analysts Adweek spoke to, the business concept comes at the right time in these uncertain economic times.

The first two popshelf stores open outside of Nashville. Tenn., This fall. Dollar General of Goodlettsville, Tennessee, plans to have approximately 30 Popshelf locations by the end of fiscal 2021. A spokesman declined to comment on other markets.

95% of the items Popshelf carries are geared towards categories such as decor, health, beauty, cleaning, and entertainment and cost $ 5 or less. “An addition to items with extreme value over $ 5.” Popshelf stores will be around 9,000 square feet, slightly larger than most dollar stores, but one-tenth the size of the average Walmart at 107,000 square feet.

This makes Popshelf a close-knit retail outlet alongside Five Below, another value retailer looking to help consumers “let go and have fun” with products that are mostly priced between $ 1 and $ 5. These products are available in eight “worlds”: Tech, Create, Play, Candy, Room, Style, Party and New & Now. Five Below was founded in 2002 and operates 950 stores in 38 states.

In his earnings announcement for the second quarter, Joel Anderson, President and CEO of Five Below noted a “challenging background” that included the Covid-related store closings earlier this year. The outlet has since reopened its stores, added 63 new outlets and is still well on its way to opening a total of 110 to 120 new locations in 2020.

Sucharita Kodali, an analyst at Forrester, said Five Below’s line of “affordable luxury” products helped it perform well in a challenging retail environment and made Popshelf a smart move for Dollar General.

“Dollar General is one of the retailers that is doing well now. I applaud your willingness to embrace new concepts, ”said Kodali. “Real estate costs have to be very cheap for them to experiment.”

Jessica Ching, Senior Principal at Gartner for Marketers, agrees that Popshelf’s timing is random.

Ching said the struggles from retailers like Party City and The Paper Store could also bode well for Popshelf. Research from Gartner showed that consumers remain ready to discover new brands in the pandemic – 36% bought something they would not normally have bought or tried a new brand for the first time.

Indeed, value-based retailing is one of the few bright spots in retail this year.

In August, Dollar General’s net sales rose 24% to $ 8.7 billion. (By comparison, Amazon’s net sales grew 40% and Walmart’s grew 9.5%.)

As a major retailer, Dollar General remained open throughout the pandemic. The chain now operates 16,720 stores in 46 states. To put this in perspective: The presence in the USA is larger than that of McDonald’s with 14,428 restaurants in the USA and Starbucks with just over 15,000 locations in the USA.

Popshelf is the second new retail concept from Dollar General. In December 2019, DGX announced that it would offer “an affordable retail option” to millennial customers in “vibrant metropolises”. It now operates 15 DGX branches in 11 states.

Kodali suspects the DGX branches are doing fine now too, as they tend to be “in higher-income areas, often in university towns.”

Popshelf’s target consumers are suburban women with a household income of $ 50,000 to $ 125,000.

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