According to the company, the number of visits to dollar stores increased 2.6 percent from June 2009 to June 2010 compared with the same period a year earlier, the most recent figures available. Over the same period, visits to large stores like Wal-Mart declined 7 percent.
The dollar stores are pulling in shoppers like Mellissa Hayden. A pizza deliverer, she is the kind of price-sensitive shopper who knows that a bottle of ibuprofen from the Dollar General near her home in Rockford, Tenn., costs just $2.50 and has 100 pills, but at Wal-Mart, she will get fewer pills for about $5.
So lately, she has been heading to dollar stores instead of Wal-Mart. “You don’t have the big crowds and it’s cheaper,” she said.
Same-store sales, which measure revenue at stores open at least a year, at the three major dollar chains have increased for at least 10 consecutive quarters. At Wal-Mart, same-store sales in the United States have declined for the last five quarters.
During the recession, Wal-Mart pulled back on very inexpensive products, suppliers said, to make the stores look less cluttered and to appeal to shoppers who might be testing out that retailer instead of, say, Target. That decision has it now playing catch-up.
“They just abandoned that lowest price point,” said Mr. Paul of Nextep.
In the last couple of quarters, Wal-Mart tried aggressive discounts on items like milk, but the price cuts did not attract huge traffic, said Thomas M. Schoewe, Wal-Mart’s chief financial officer, in a conference call with reporters last month.
He said that dollar stores were part of the challenge.
“Many times it is convenient to walk into a dollar store and even though the price per unit, if you will, may be a little bit higher at the dollar store, if they can find that product and still live from paycheck to paycheck, that’s how they’re solving that problem,” Mr. Schoewe said.
The dollar stores have found creative ways to keep their prices low. When commodity costs rose for suppliers, for example, the dollar stores asked them to decrease the number of sandwich bags in a box or pushed them to come up with a cheaper version of the products.
To increase their attractiveness to the low-income customer, the dollar stores have also switched out merchandise like trinkets for necessities like food and detergent.
At Family Dollar, most customers have incomes under $40,000 and have “really curtailed discretionary spending out of necessity,” said Kiley Rawlins, a spokeswoman. But customers are shopping more frequently, she said, and buying a greater variety of items, a reflection of the items like cleaning products that the store now carries.
Some of the stores have even managed to reach some middle-income shoppers, by increasing products from well-known brands like Hanes, Quaker Oats and Nabisco.
“This is a break from historical trends, where dollar stores really catered almost entirely to lower income shoppers,” Ms. Viamari of SymphonyIRI said.
Many manufacturers have been hurrying to get dollar shoppers’ attention. Tracy VanBibber, senior vice president for sales at the Dial Corporation, a division of Henkel that makes products like Dial soap and Soft Scrub, said there were now enough low-end customers — known in the industry as value shoppers — to justify the investment.
“We’re really trying to get better at thinking of the value shopper earlier in our innovation pipeline,” Ms. VanBibber said. “The retailers that service value shoppers have enough scale that manufacturers can customize and it pays off now.”