Blog

As Some Retailers Stumble, Dollar Stores Continue to Show Strength

April 25, 2017

Although most big box retailers are currently struggling in today’s retail environment, the dollar store segment is powering forward, developing more locations, expanding, and testing concepts. Howard Davidowitz, chairman of New York City-based retail consulting and investment banking firm Davidowitz & Associates, believes the distress within the middle class in conjunction with the low prices and convenience offered by retailers such as Dollar General and Dollar Tree/Family Dollar make for a mutually beneficial relationship which is causing dollar store segment growth to be so explosive. Dollar General currently operates over 13,000 stores with plans to open over 1,000 more in 2017, its competitor Dollar Tree/Family Dollar opened between 500-600 locations in 2016, with over 14,000 locations across forty-eight U.S states and five Canadian provinces. At half the size of its parent stores, Dollar General has formulated two new concept stores, DGX and slightly larger DG Plus in an attempt to attract millennial shoppers. According to Randy Blankstein, president of national net lease commercial real estate firm The Boulder Group, cap rates have increased ten basis points year-over-year for dollar stores compared to net leased retail locations which have flatlined in 1Q17. He expects institutional activity to pick up over the next year or two.

As Some Retailers Stumble, Dollar Stores Continue to Show Strength