Dollar stores, traditionally frequented by low-income shoppers, are seeing a notable shift in their customer base.
Both Dollar General and Dollar Tree reported an uptick in visits from middle- and higher-income households during the first quarter of the year, a trend some analysts attribute to economic uncertainty and rising costs driven by tariffs.
Dollar Tree announced that 2.6 million new customers visited its 9,000 stores in the first quarter, with the majority coming from households earning more than $100,000 annually.
“We saw a meaningful traffic increase from customers with household incomes of more than $100,000,” CEO Mike Creedon said during the company’s quarterly earnings call.
Similarly, Dollar General CEO Todd Vasos noted that the company experienced the highest level of higher-income customer traffic in four years.
“While our core customer remains financially constrained, we have seen increased trade-in activity from both middle- and higher-income customers,” Vasos stated.
Economic pressures—including heightened inflation concerns and uncertainty stemming from tariffs—have driven consumers across all income levels to seek greater value in their purchases. According to a University of Michigan survey, consumer sentiment has declined, with many Americans feeling the effects of rising prices and stagnant wages.
For Dollar General, these shifting dynamics translated into a strong financial performance in the first quarter. The company reported net sales of $10.4 billion and a 2.4% increase in same-store sales, exceeding expectations. Executives noted that higher-income shoppers made more frequent visits and spent more per trip, including on discretionary items such as home goods and apparel.
Despite the increase in spending, the total number of customers visiting Dollar General declined slightly by 0.3%. Analysts noted that while the quarter was solid, same-store sales growth still lagged behind competitors like Walmart.
To maintain its value pricing amid trade tensions, Dollar General is taking steps to diversify its supply chain, negotiate with vendors, and reengineer products. Less than 10% of its merchandise is directly imported, helping the company soften the potential impact of tariffs.
Dollar Tree is facing similar challenges, estimating that tariffs could add $200 million in costs this year—about 1% of its projected net sales. To offset the increase, the company is exploring alternatives such as sourcing from different countries and introducing higher-priced items above its traditional $1.25 baseline.
Despite these headwinds, Dollar Tree saw net sales grow by 11.3% to $4.6 billion in the first quarter, with net income rising 14.4% to $343.4 million. Same-store sales were up 5.4%. The company is also in the process of divesting its Family Dollar division, which has faced operational difficulties in recent years.
Retail analysts view these trends as part of a broader shift in the US consumer landscape. With inflation and uncertainty influencing purchasing decisions, value-oriented retailers like Dollar General and Dollar Tree are increasingly appealing to a wider range of income groups.
Looking ahead, Dollar General raised its full-year guidance for sales and earnings, reflecting confidence in its evolving customer base.
“We believe our positive first-quarter results are a testament to the importance of our value and convenience proposition,” said Executive Vice President and CFO Kelly Dilts.
Axios, the Financial Times, and PYMNTS contributed to this report.
