Study: Dollar stores drew lots of visitors in Q2

Even as inflation cools, dollar stores and deep discounters—especially Dollar Tree—continue to see increased traffic while grocery visits hold steady, according to a second quarter analysis released Monday by Placer.ai.

Weekly visits to dollar stores rose almost every week of the period from April to June, with year-over-year weekly foot traffic up by 3.7% to 9.7% since mid-May, for an average increase of 4.7%. (Fitness centers and car washes outperformed all retail segments studied during Q2, with 19.3% and 18.5% growth, respectively.)

Meanwhile, grocery retail appears to be bouncing back, Placer.ai found, with grocery foot traffic remaining on par or exceeding last year’s traffic levels. That “suggests that the cooling food inflation may be bringing consumers back to supermarkets,” the report noted.

Interestingly, Placer.ai noted growing fragmentation in the grocery market, with 58.5% of all visits going to smaller chains such as H-E-B, ShopRite, Trader Joe’s, Lidl, Price Chopper and more. Kroger banners commanded 19.2% of visits during the period, while Albertsons stores took 12.1%, followed by Ahold Delhaize at 9.1% and UNFI at just 1.1%.

For discounters, Dollar Tree took the top spot with 39.4% of visits, followed by Dollar General at 32.9%, but Placer.ai said retailers such as Five Below, Ollie’s Bargain Outlet, Ocean State Job Lot and Bargain Hunt also saw significant year-over-year traffic growth during the second quarter.

Dollar Tree, though, notched a 10.5% increase in visits year over year, with its Family Dollar banner seeing a 5.1% jump, “no easy feat given their already relatively large footprints,” the foot traffic data firm noted.

Chesapeake, Virginia-based Dollar Tree told investors last month it had not seen much customer pushback after it bumped prices to $1.25, paving the way for it to broaden its price points to $3, $4 and $5—especially in food and beverage categories.

“The hard part has been done,” Dollar Tree CEO Rick Dreiling said, according to a transcript from financial services site Sentieo. “That leap to $1.25 was painful but that is done now, and it’s time for us to capitalize on it.”

Demand for the differentiated assortment of Trader Joe’s remains strong, which Placer.ai called “the real winner of Q2.” Quarterly visits to the Monrovia, California-based neighborhood grocery chain climbed 9.7% over the year-ago period, followed by WinCo Foods (5.5%), Aldi (5.4%), ShopRite (2.8%) and H-E-B (2.5%).

“Trader Joe’s continued success may be due to the company’s reputation as a budget-friendly grocery option,” Placer.ai said in a foot traffic report last month. “The California-based grocer’s many private-label products help keep prices relatively low, and this value perception could be driving trade-down to Trader Joe’s … Trader Joe’s maintains its position as a specialty grocer that affords price-sensitive consumers a premium grocery experience when luxuries are few and far between.”

Overall visits to superstores dipped 2.4% during the second quarter, but Costco performed better than others, with 0.7% growth in foot traffic. Traffic to both Walmart and Target fell 2.8%, while visits to BJ’s Wholesale Club dropped 4.1%. Placer.ai, however, noted that many of these retailers saw an overall increase in dwell time during the period which might offset the “very small” drop in visits.