U.S. dollar stores have not become collateral damage, as feared, in a price war among big retailers including Wal-Mart Stores Inc and Kroger Co, which has pushed down prices of key items such as eggs and laundry detergent.
Dollar Tree Inc and Dollar General Corp, which together operate more than 28,000 stores across the United States, have said they don't need to keep cutting prices to stay competitive. Both companies lost some sales to Wal-Mart last year, right after the retail giant started slashing prices and gave up margins to grab market share.
But they have recuperated considerably, though sales growth is expected to remain pressured in the short term as bigger retailers win customers by matching their prices. Their popularity with price-conscious shoppers who want to avoid big stores that typically stock large packs of supplies and more expensive national brands, largely shield them from competition, analysts said.
Dollar General forecast net sales to increase by about five percent to seven percent for the year ending Feb. 2, just short of the 7.8 percent average growth it reported over the past two fiscal years.
Dollar Tree expects net sales for the year ending January to rise 5.9 percent to 7.4 percent. The company reported an average growth rate of 8.6 percent in the past two years, excluding sales from Family Dollar, which it bought in 2015. In contrast, Wal-Mart and Kroger expect low single-digit growth. Dollar stores, which operate on razor-thin margins, are doing their bit to draw in customers: sprucing up stores, stocking more national brands such as Tide, selling food and fresh produce, and are opening more stores.