Report: Discount Retailers See New Wave of Cost-Conscious Shoppers

Discount retailers are set to see high traffic this year as consumers worry about rising costs.

That’s according to a new report from foot traffic-tracking data company Placer.ai. It found that weekly visits to discount chains such as Five Below and Dollar Tree were up by double-digit percentages year-over-year during the fourth quarter in every week but one.

“As consumers continue looking for ways to adjust their shopping habits to the ongoing inflation, the discount & dollar store sector appears well positioned to maintain their visit gains going into 2023,” the report said.

Of the discounters the report studied, Five Below saw the greatest increase in foot traffic, with visits jumping 50% compared to the fourth quarter of 2019. Dollar General and Family Dollar were both up by more than 20%, while Dollar Tree saw trips increase by 15.3% compared to pre-pandemic figures.

The study comes as dollar stores and discount retailers are expanding to meet growing demand, as PYMNTS reported last month.

For example, Dollar General plans to fund another 3,170 real estate projects in the United States during the fiscal year 2023. That includes opening 1,050 new stores, 2,000 remodels, and 120 relocations.

Meanwhile, Dollar Tree is continuing a chain-wide remodeling and store refresh program aimed at the growing demand for food and drink and meeting the needs of customers in hard-hit rural areas with limited retail choices.

“We are developing an assortment to meet our shoppers’ family needs as they are looking to save money by dining at home,” Dollar Tree CEO Mike Witynski said during a quarterly earnings call in November.

Recent research by PYMNTS shows consumers are buying fewer items and “trading down” at the retail level due to recession concerns.

The PYMNTS report “Consumer Inflation Sentiment: Perception Is Reality” finds shoppers “actively trimming goods from their grocery lists or even downgrading the quality of their purchases to make ends meet.”

Notable in the report is a continuation of the belt-tightening seen throughout last year, with consumers cutting back on discretionary retail purchases while trading down retail goods and shopping experiences to trim costs.

“Food prices are among the faster-growing areas of the index,” the study says, noting Bureau of Labor Statistics findings that show the costs of food at home and away from home increasing by 11% and 8.5%, respectively, in the last 12 months.

“Gasoline prices are 10% higher than a year ago, down from a 60% year-over-year increase in July, as recorded by the BLS. Increasing housing costs are contributing 2.3 percentage points to overall annual inflation.”