We visited Dollar Tree and Dollar General to see which was a better store - and the winner was clear
We visited a Dollar General and a Dollar Tree store that were a 15-minute walk away from each other in Brooklyn.
Our first stop was at Dollar General. The chain has 14,321 stores in the US, most of which are located in rural areas. In February, it announced it would be opening 900 more locations in 2018.
Dollar General was initially rolled out to areas that were not already served by a Walmart. As these stores are generally in rural markets, they cost less to operate.
Walmart launched a series of mini express stores in 2014 with the aim of winning back the midweek shopper from Dollar General. The strategy was not successful, and Walmart ended up closing these stores and selling 41 of the locations to Dollar General.
Source: Dollar General and Business Insider
On first impression, the store looked great. It was modern and bright.
While Dollar General isn't strictly a dollar store, prices are generally 20% to 40% lower than traditional grocery and drug stores, according to a report done by credit rating company Moody's.
The company's target shopper comes from a household making $40,000 or less a year.
"The economy is continuing to create more of our core customer," Dollar General CEO Todd Vasos told the WSJ in December.
When the economy bites, the company flourishes.
"We are putting stores today [in areas] that perhaps five years ago were just on the cusp of probably not being our demographic, and it has now turned to being our demographic," Vasos said.
At the front of the store there was a large selection of snacks, drinks, and candy.
Next to this was a small "fresh produce" section. The company has been adding groceries and fresh produce to drive traffic to stores. By offering a bigger selection, it can better compete with Walmart.
Vasos said that Dollar General would roll out fresh produce to 100 more stores and said that same-store sales numbers were three times higher in stores that stocked fresh produce than those that didn't.
This store didn't have fresh fruit or vegetables, but you could pick up basics such as milk and eggs. There definitely wasn't enough here to do your weekly grocery shopping, but it could be enough to grab some essentials midweek.
While there were a ton of deals on well-known products ...
... you also had the option to pick up lower-cost, private-label items.
On average, the company's stores are 7,300 square feet in size. Considering this is one-tenth of the size of a Walmart store, we were impressed by the variety of products on offer.
Source: Dollar General
Dollar General is known for its affordable, basic products.
The more expensive items were placed behind a plastic barrier. When you lift the plastic, a beeping noise sounds.
Some products were packaged in smaller quantities to keep prices down.
Instead of selling items in bulk, allowing for long-term savings, dollar stores sell small quantities of items that customers can afford. But, this ultimately means the customer will pay more on a per-ounce or per-item basis in the long run.
The chain started off in 1955 as a true dollar store, where everything cost $1. Today, you can still find some $1 deals.
There were lots of women's and men's beauty and grooming products.
We spotted some well-known brands, such as Maybelline, at big discounts.
There was a small clothing section in this store, but the majority of the space was taken up by home-ware and kitchenware. You could even pick up a $14 barbecue.
At the cashier, you could buy magazines, gift cards, and cigarettes. This location did not sell alcohol. Overall, the store was a good size, easy to navigate, and a convenient way to shop for essentials.
Dollar Tree instantly set a different tone.
These stores are predominantly located in suburban areas.
The store had a bare-bones design and looked tired and rundown. However, it stayed true to its name, and everything cost $1.
The chain's seasonal merchandise accounts for 49% of its revenues, according to Moody's. Almost a quarter of this store was taken up by seasonal items — there were a lot of Easter toys, chocolates, and St Patrick's Day decorations.
The store changes its assortment constantly, which gives its shoppers a treasure-hunt kind of experience. For this reason, e-commerce retailers such as Amazon are less of a threat to the store.
"Dollar stores have not sought online penetration for the simple reason that they don't have to," according to Moody's.
Despite this, both Dollar Tree and Dollar General have an online platform.
There were three rows devoted to greeting cards.
The store is definitely less slick than Dollar General. There were lots of unpacked boxes and abandoned crates. In one corner, we spotted a stray traffic cone.
Dollar General reported worse-than-expected results in its most recent quarter. Same-store sales rose 3.8% at Dollar Tree and 1% at Family Dollar, a rival chain that it bought in 2015. Meanwhile, same-store sales grew 4.3% at Dollar General in the third quarter of 2017. It has not yet reported fourth-quarter results.
Dollar Tree acquired Family Dollar for $8.8 billion in 2015.
Dollar Tree stores are between 8,000 and 12,000 square feet, which makes them much larger than Dollar General. The shelves were completely empty in some parts of the store.
Although everything here is $1, some of the brands were less well-known.
The grocery section of the store was larger than Dollar General's. But, there was no fresh produce.
Dollar Tree has also increased the number of food and drink items it sells, as these drive traffic into stores.
There were lots of non-perishable products such as chips, pasta, dried herbs, and oatmeal.
The frozen-food section was also much larger here. You could even pick up a steak for $1.
We spotted some more premium products dotted around the store ...
... including Betty Crocker baking kits and Hershey's ice cream.
The remaining part of the store was stocked with beauty products, children's toys, and accessories.
The kitchenware section was impressive. These glasses were a steal at $1, and there were lots of cheap crockery and cooking utensils.
There are definitely a lot of bargains to be had at Dollar Tree, but it didn't feel like the place you could do a weekly shop. Many of the shelves were bare, which also felt depressing.
All in all, it was a bit of a mess.
The verdict: Dollar General was leaps and bounds ahead of Dollar Tree in terms of the shopping experience and quality of products. It felt as if Dollar Tree were relying on the fact that its low prices would always draw customers in, and while this may be true, Dollar General definitely seemed like a bigger threat to stores like Walmart. Dollar General is somewhere between a dollar store and a traditional store, which means it is well-positioned to win over more customers.
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