LAS VEGAS -- She ran into Greenbacks Dollar
Store for just a minute to pick up a couple of birthday cards
and some paper goods. Then a few other items caught Leila Frankel's
eye -- the nail clippers, the dish soap, the ceramic cattle --
so she sent her 8-year-old son into the 100-degree heat to stall
her husband.
"Go to the car and tell Daddy this will only take a few more
minutes," Frankel instructed. "And ask him if he's got another
$10 on him. Oh, never mind. They take credit. I'll be out in
10 minutes, OK?"
Her son gone, the 38-year-old cocktail waitress grabbed a
squeaky brown plastic cart and started her own private amazing
race, barrelling through the narrow, unkempt aisles for whatever
she could claim to need before her time's up. Into the basket
fell as random an assortment of 100-cent sundries as ever there
was -- a pack of lightbulbs, a new cell-phone charger, a Nestle's
Toll House cookie kit. She paused for a moment to debate whether
the envelopes she wanted should be 9-by-12 inches or 10-by-13
inches, then grabbed a pack of each.
"At a buck each, I might as well take both, huh?" she shrugged.
"I mean, I make it up on the batteries. They'd cost me at least
$5 at Walgreens, y'know."
Frankel had never popped into a dollar store before, but like
the rest of the nation these days, she's now hooked. It's been
decades since five-and-dime stores were able to offer much more
than Bazooka for that titular nickel, but the dollar-store sector
has taken over as the arbiters of the hard-to-believe bargain.
The fact that the loose change under the sofa cushions can become
gift wrap, toilet paper or picture frames is as dazzling to
millions of Americans as anything they might find on the Las
Vegas Strip.
Wall Street thinks the trend is penny-pretty, too, says Boston-based
analyst Michael Baker of Deutsche Bank. Stock values for four
of the largest publicly traded dollar-store chains, Dollar General
Corp., 99 Cents Only Stores Inc., Dollar Tree Stores Inc., and
Family Dollar Stores Inc., rose an average of 15 percent since
January 2002 while the Standard & Poor's 500 index fell 14 percent.
And, as expansion plans for major big-box retailers were slowed
by the anemic economy, at least 2,700 new dollar stores opened
from 2000 to 2002 and more than 1,000 will debut this year,
Baker noted.
"This industry is coming out of its infancy," said Kristina
Mullen, founder of the 5-month-old Retail Dollar Stores Association
and manager of the second annual Dollar Store Expo convention
in Las Vegas this week. The show, too, has seen dramatic growth,
doubling in size and attendance since its 2002 premiere. "We're
becoming mainstream very fast."
Indeed, the profile of the dollar-store consumer is changing,
says analyst Todd Hale, senior vice president for ACNielsen
U.S. Once the province of the poor and situated in the least
desirable neighborhoods in order to keep rents low, the stores
are successfully moving into better markets and attracting wealthier
customers. In 2002, 45 percent of households making $70,000
or more had shopped one, up from 37 percent in 2000, ACNielsen
data shows.
"While it's still very strongly skewed to low-income households,
they are moving into more urban and suburban locations with
bigger, brighter stores," Hale said. "If you go into these stores,
you see they're offering a wide variety of items with some pretty
good values. The Costcos and Sam's Clubs of the world have taught
middle and higher-income consumers to be cost-oriented in their
purchasing, and here you can find even better deals."
In fact, said 99 Cents Only President Eric Schiffer, the most
profitable of his 155 stores -- much to even his surprise --
is one at the edge of tony Beverly Hills, Calif. That e pluribus
unum emporium did $9.9 million in sales, one buck at a time,
last year. Schiffer figures the recent economic downturn helped.
"The toughest thing is to get somebody, especially an upscale
customer, to come in for the first time," said Schiffer, who
said his chain will open 38 stores this year and 48 next year.
"Tough times, when people have less to spend, get people to
come in, and then they see what we have and they come back again
and again."
What customers see is an increasing emphasis on familiar brands
of household goods and commonly used groceries stocked all year
round alongside the mish-mash of close-out items that appear
at random to keep to bargain hunters guessing what they'll find
next. Reflective of the sector's coming of age is the fact that
major manufacturers such as Proctor and Gamble and Dial now
jockey to sell their popular products in dollar stores and even
create special sizes of certain items especially for the one-dollar
price.
"As our niche becomes recognized by the major hard-line vendors
and the stigma surrounding this shopping experience disappears,
manufacturers see we are a great growth vehicle for them," said
Family Dollar executive vice president George Mahoney, whose
chain of 4,841 locations in 43 states is adding 500 more this
year. "We're one of fastest-growing retailers in the industry.
Our company has no long-term debt. Any manufacturer dealing
with us know they'll be paid and we'll move huge volumes of
their product. That makes us a very attractive retailer for
any manufacturer to have an interest in."
Not all so-called "dollar stores" are created equal, though.
Dollar Tree and 99 Cents Only are "pure" dollar stores, selling
every items for a buck or less, but Family Dollar and Dollar
General merely promise deals at a factor of a dollar. Family
Dollar offers items that cost as much as $10, while some at
Dollar General can run as high as $20.
And while the other three chains are busy loading up on name-brand
items and must-have household staples, the shelves at Dollar
Tree, which owns 2,319 stores including 19 in Massachusetts,
continue to largely attract impulse shoppers who get a kick
out of knick-knacks.
"Walk your favorite mall and you'll see there's probably at
least one candle store selling scented or colored candles for
$10 or $20 a pop," said spokesman Adam Bergman of Dollar Tree,
which will acquire the 100-store Greenbacks chain for $100 million
in cash by month's end. "It's a real strong trend embraced by
American consumers, but at the end of the day, it's just wax.
We said, 'Can we do it at our price point?' Now we have a half-aisle
of candles in all of our stores, each for a buck."
While AC Neilsen's Hale is impressed by the sector's relentless
growth and rising popularity, he noted that Wal-Mart and others
are now starting to experiment with dollar-only sections or
special dollar-day sales that could give the stand-alone dollar
stores a run for their Sacagaweas. Yet the smaller size of dollar
stores -- they're typically less than 10,000 square feet, a
fraction of an imposing 100,000-square-foot Super Wal-Mart --
makes them more convenient for busy shoppers and more manageable
for older customers, Hale said.
Schiffer, of 99 Cents Only, is undeterred by competition.
His chain opens a new location next week in Las Vegas just two
doors down in the same strip mall as the Greenbacks where Frankel
succumbed to her shopping spasm. The store's opening day tradition,
giving the first nine customers a chance to buy a 19-inch TV
set for 99 cents and the next 99 a chance to buy a child's scooter
for 99 cents, usually draws media buzz and dozens of shoppers
willing to camp out overnight.
But ultimately, for these stores, the gimmick that grabs folks
is the thrill of getting something for next to nothing.
"People can switch off their brains when they shop. They don't
have to think, 'Can I afford this?' " Bergman said. "Although
people sometimes just can't believe the price. Even though it
says everything's a buck, the question we still get in the store
that people ask is 'How much is this?' "
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