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A Foolish Take: Dollar Stores Are Dominating Brick-and-Mortar Retail


Many investors believe the popular narrative that Amazon  is crushing brick-and-mortar retailers. The e-commerce titan certainly humbled plenty of them, but some retailers continue to expand by opening new stores.

The top three dollar store chains in America, for example, opened more than 1,800 stores last year. Dollar General (NYSE: DG) led the pack, followed by Dollar Tree (NASDAQ: DLTR) and its subsidiary, Family Dollar.

Graph showing new dollar store openings in 2017

Data source: 10-K filings. Chart by author.

In 2018, Dollar General plans to open 900 new stores. Dollar Tree plans to open 350 more namesake locations and 300 new Family Dollar sites, and rebanner 50 Family Dollar locations as Dollar Tree stores. All three chains posted positive comparable-store sales growth in their latest quarters .

Dollar General focuses on rural areas, while Dollar Tree and Family Dollar are rooted in urban and suburban areas. All three chains try to open their stores closer to lower-income neighborhoods than superstore rivals like Walmart .

Gas expenses for traveling to the store, time spent shopping, and product prices are all key concerns for lower-income shoppers. That allows dollar stores to flourish in an age when many retailers are getting squeezed by the competition.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Leo Sun owns shares of AMZN. The Motley Fool owns shares of and recommends AMZN. The Motley Fool has a disclosure policy .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.



This article appears in: Personal Finance , Stocks
Referenced Symbols: DLTR , DG



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