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Dollar stores: consumer convenience without the cost

Ever wonder why you’re seeing a new dollar store popping up on nearly every corner? While some of the larger discount stores have been closing locations and seeing reduced sales, retail outlets like Dollar General Store, My Dollar Store, Dollar Tree Stores and Family Dollar Store have been sprouting like mushrooms across the country.

“It is like having a convenience store Wal-Mart,” says Steve Floyd, owner of Steve Floyd Properties, which manages the Cloverleaf Center in Hattiesburg. “They are convenient, but you don’t have the outrageous prices you pay at convenience stores or gas stations.”

In July the Cloverleaf Center completed a deal to open a Dollar General Store. Within a month, the store was open. The new store is less than a mile from an existing Dollar General, and the company foresees eventually having a dozen stores in Hattiesburg.

“We were very impressed with them,” Floyd said. “They have some good credit as far as a tenant. They are a very stable company that is expanding.”

Other dollar stores are also expanding rapidly in Mississippi and elsewhere across the country. For example, the August opening of the new Dollar General Store in Hattiesburg was mirrored by the opening of a new Dollar Tree across U.S. 49 from the Cloverleaf Center.

“With people wanting the most for their money, and Dollar Tree being the nation’s largest $1 price point, this is the place to come,” said Jerry Beaugez, manager of the Dollar Tree in Edgewater Mall, Biloxi.

Dollar Tree already had a smaller store in the Turtle Creek Mall in Hattiesburg. Beaugez said the new store near Cloverleaf is much larger at 12,000 square feet. “At the opening people were standing in line to see what would be offered in such a large Dollar Tree,” Beaugez said.

Beaugez said customers often come into his Dollar Tree Store at Edgewater Mall and tell him they just bought the same item at Wal-Mart, Kmart or one of the drug stores, and paid too much for it.

“If companies like ours are able to offer these products for $1 when the other stores are charging a lot more, is it making the other retailers think, ‘Are we charging too much?’” Beaugez said.

Dollar stores are expanding rapidly because the stores have done a good job identifying what the customer wants and providing a thrifty alternative to convenience stores and big discount stores, says Jeff Snyder, general manager, the Mall at Barnes Crossing, Tupelo.

“The dollar stores do tend to be very popular,” Snyder said. “I think there are so many of them because they offer lots of convenience and great price and value. Before if you wanted quick service, the only choice was a convenience store where prices are higher.”

Snyder said the Dollar Tree in the Mall at Barnes Crossing is a good mix for the mall because it carries a lot of products in demand by other tenants and employees.

“And you can’t argue with the price,” Snyder said. “Bargains get everyone’s attention especially in the past couple of years with the economy down. People are a little more sensitive to good prices.”

Convenience may be nearly as big a pull as good prices.

“People would rather go into a smaller store where they can pull up in front, get what they need quickly and leave as opposed to parking in a mega parking lot, shopping in a mega store, and standing in a long line at the checkout,” said Pat Werne, project manager, international/national division of the Mississippi Development Authority.

“With the shrinking day, time is so important to people. Also, the big stores try to be everything to everybody, and the smaller stores tend to focus on certain things. Customers know they can go in there with confidence, get those items and leave.”

Much has been said about the negative impact of Wal-Mart on small, locally owned businesses. Is the dollar store expansion coming at the detriment of mom-and-pop stores?

Werne thinks not. She said the smaller stores can’t compete with either Wal-Mart or the dollar stores on discount items. The mom-and-pop stores can compete by offering better service, and finding a niche in the marketplace providing products that can’t be found at the chain stores.

Experts said stores most likely to be affected by the current expansion of the dollar stores are small local or regional chains of discount stores. The dollar stores may also cut into profits at convenience stores.

Contact MBJ contributing writer Becky Gillette at mullein@datasync.com or (228) 872-3457.


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