Shopping for a theme party, Lindsey Ellefson was greeted by name at her local dollar store. Her friend laughed at what a regular the 24-year-old New Yorker had become at the discount shopping palace. Ellefson shrugged it off. “We joke all the time that I would shop at these kinds of stores no matter how much money I had.”
One of America’s millions of price-conscious shoppers, Ellefson is passionate about getting a deal. The freelance writer texts her friends when she sees an especially good dollar store discount. She haggles with the cashiers at the independently run retailer when she feels a product is overpriced. As a member of the nation’s most indebted and underemployed generation, Ellefson isn’t ashamed of her discount-shopping ways: “I’ve never experienced any kind of shame or stigma—thankfully.”
She is not an outlier. The retail model that began more than a century ago as the “five-and-dime” is back, and it’s gone big. Dollar store shopping is attracting consumers across multiple demographics, including America’s wealthiest. Households with an annual income of more than $100,000 make up 19 percent of the spend at national dollar store chains, comparable to the 23 percent that comes from households with an annual income of less than $25,000, according to a July report from retail analytics firm NPD.
The main difference between the 1 percent and the 99 percent is how frequently they turn to dollar stores: Lower income shoppers come in more frequently and spend more. Considering that the average employed millennial earns just $34,100 annually, it’s logical that this generation would drop more dollars on the discount products offered by the likes of Dollar Tree Inc., Dollar General Corp., and 99 Cents Only Stores LLC.
Retailers are understandably eager to get their hands on a chunk of the $600 billion annual spending power of the millennial demographic. Though Dollar General didn’t return a request for comment, the company’s chief executive, Todd J. Vasos, said during a first-quarter earnings call that millennial shoppers make up about a quarter of the company’s sales line.
“The millennial shopper is a segment that I was particularly excited to see emerge as a core consumer for DG, as this segment is so important to the future of retail and Dollar General,” Vasos said.
At 99 Cents Only, a West Coast-based dollar store chain, shoppers aged from 18 to 39 make up 36 percent of consumers. “With millennials, there is no stigma with them shopping at dollar stores because they grew up in a different environment than our parents, who covet things,” said the chain’s director of marketing, Erin Estelle. “We’re more frugal because we’ve had to be ... There’s no shame in that, and millennials know that.”
They’re not the only ones to realize this. Late last year, Target Corp. revamped its dollar section by rebranding it Bullseye’s Playground after the company’s canine mascot—and adding slightly higher-priced items that appeal to millennials. The demographic has long been the company’s mainstay, and its dollar offerings are so popular that they’re resold on craft website Etsy Inc. at a markup. The Target relaunch has led to double-digit growth in that department, Target spokeswoman Amy Koch said.
But just as quickly as dollar chains have proliferated across the country, the online marketplace has begun to catch up. Around the time Target was trotting out its dollar pup, Hollar Inc. launched, seeking to marry millennial enthusiasm for online shopping with discount goods.
Hollar sells items cheaper than $10 and applies the same business model as traditional brick-and-mortar dollar stores, rapidly sourcing an ever-changing array of items, from stuffed unicorns to mason jars to baby booties. A third of the company’s business comes from the toy section, and the average customer is a millennial-aged mom living in middle America. However, twentysomethings and thirtysomethings furnishing their first home may make up a substantial chunk as well, seeing as 15 to 20 percent of Hollar’s business comes from home goods sales. The discounts are steep: An Essie nail polish that sells for $9 on Amazon.com Inc. costs $3 on Hollar. A hairbrush that retails for $7 at Wal-Mart Stores Inc. is less than half the price on Hollar.