Is There a Growing Market for Dollar Store Grocery?
The rise in dollar stores across rural America is no secret, but how are consumers using them to fulfill their food needs?
A recent survey-based report by Purdue University’s Center for Food Demand Analysis and Sustainability shares results from the survey which assessed consumer behavior and food selection at dollar stores for 1,200 shoppers across the U.S., based on food security status rather than demographic.
“More than half of Americans have recently shopped at a dollar store,” says Jayson Lusk, a professor and department head of Agricultural Economics at Purdue, who also leads the center. “When it comes to food, many of these purchases are snack items. If consumers do pick up more food at a dollar store, it makes sense that people typically buy canned or frozen foods since these are the easiest options for dollar stores to stock.”
Dollar store shoppers purchased a number of foods, with snack foods, candy and beverages ranking the highest, while only purchasing grocery items, such as milk, every one in five trips, says the report.
While the grocery selection at many dollar stores is fairly limited, results show that there could be a market for expanded food selection, especially with nearby consumers, says the report.
Of those surveyed, 50% reported that a full-service grocery department would be a draw. Additionally, nearly 60% of consumers said they live within 10 minutes of a dollar store, which has the potential for capitalizing on access issues, says Lusk.
The report also notes that as the slow easing of food inflation continues, future reports will provide a helpful picture of how consumers are doing in the area of food spending.
“If people go out and spend more at bars and restaurants, as one would expect, then we could say that consumers are feeling fairly confident,” Lusk says. “But if food away from home spending does not increase in our data, especially as food away from home inflation continues to pick up according to official measures, then we might have some questions.”
Total food spending is up 7% from this time last year, the report says, while consumers similarly estimate annual food inflation to be about 7%.
