Here's a statistic: Over a five-year period, the equivalent of more than three dollar stores opened in the U.S. each day.
And they're not done growing yet.
With the dollar store segment reaching nearly 30,000 locations at the end of 2015, a forecast from Conlumino research firm predicts another 3,800 of these shops will open by 2020 — making the space more crowded by the day.
Yet as the $45.3 billion dollar-store industry matures in the U.S. — making annual revenue growth more challenging to come by — two entrepreneurs have found what they consider to be a gap in the market: the internet.
While dollar stores were once rebuked by shoppers who had the means to spend their money at more well-to-do places, many Americans traded down to them during the throes of the recession.
But after noticing that none of the major dollar-store players had their websites well configured for online retailing (Dollar Tree, for example, sells items by the caseload), serial entrepreneurs David Yeom and Brian Lee hatched up the idea for Hollar, an online dollar store that launched late last year.
The idea was simple: Create a digital flagship where nothing costs more than $5, so shoppers don't feel guilty scooping up extra items on impulse. The execution, however, is where things get tricky. Namely, there's an inherent mismatch between selling low-cost items online and footing the bill for packing and shipping them.
Now, following eight months of nearly 50 percent sales growth and $1.5 million in revenues, Hollar's Yeom is making the case that the company has figured out how to profitably bring the dollar store into the digital era. At the crux of its strategy are two tactics: playing into consumers' love for a treasure hunt, and finding ways to ensure the orders they ship are additive to its bottom line.
"A space this massive, an opportunity this big … we wondered, are we crazy?" Yeom said.