More Americans are switching up their shopping routines and heading to dollar stores with inflation continuing to cause the prices of groceries to skyrocket.
From October 2021 to June of this year, the average spending on groceries at discount chains such as Dollar Tree increased by 71%, while the spending at more popular big-name chains decreased by 5%, according to NewsNation.
The Consumer Price Index Summary for June showed that inflation creeped up by 1.3% to 9.1%. Food, gasoline, and shelter were the indexes that saw the biggest increases, as the food index jumped up 1% in June and is up 10.4% over the last 12 months.
The food at home index increased by 1% in June, and is now at 12.2% over the last year. It has become very challenging for many Americans to afford all of their usual groceries with prices of meats, produce, and dairy all increasing. It's even more challenging to shop for healthy products without spending more than your budget.
Despite all of the price increases, Dollar Tree and fellow bargain store Dollar General announced huge first quarter sales increases at the end of May.
Dollar Tree, which owns Family Dollar, said in a press release that consolidated net sales increased 6.5% to $6.90 billion from $6.48 billion in the prior year’s first quarter and gross profit increased 19.2% to $2.34 billion from $1.96 billion in the prior year’s first quarter.
"Our initiatives are working and providing increased profits and cash flow," Michael Witynski, Dollar Tree President and CEO, said. "We believe now is the ideal time to accelerate investments focused on driving growth through improved associate and shopper experience, while propelling greater efficiencies.
"We anticipate these multi-year investments will be focused around our associates, our distribution network and supply chain, our pricing and value proposition, and our technology."
Dollar Tree added that they expect their consolidated net sales for the year to be between $27.76 billion to $28.14 billion, an increase from the previous expected range of of $27.22 billion to $27.85 billion.
During the first fiscal quarter, Dollar General saw net sales increased by 4.2% to $8.8 billion, despite same-store sales decreasing by 0.1% and their operating profit dropping by 17.9% to $746.2 million.
"Despite ongoing headwinds due to supply chain pressures and heightened inflation, we remained focused on controlling what we can control and delivered solid financial results, which exceeded our expectations for sales and EPS for the quarter," Todd Vasos, Dollar General's CEO, said in a statement.
According to Yahoo Finance, visits to dollar stores were up 13.2% in the second fiscal quarter compared to the first quarter, and overall foot traffic increased by 8% year-over-year. Family Dollar's foot traffic increased by 16.3% year-over-year at the end of the second quarter, while Five-Below increased by 10.2%, Dollar General rose by 8.5% and Dollar Tree went up by 5.9%.
Luckily, there will be even more dollar stores coming around the country throughout the rest of the year to make shopping a bit les expensive. Dollar Tree plans to add 1,500 stores this fiscal year, Dollar General is expected to add 1,100 stores, and Family Dollar is aiming to add 800 more stores, per NewsNation.
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