Confectionery boost for dollar store-demand - report

By Neil Merrett

- Last updated on GMT

Related tags Retailing Price

Consumers at various levels of income are increasingly turning to lower cost ‘dollar stores’ to appease their sweet tooth, according to new US-based research suggesting candy and snacks are a major focus for budgeting buyers.

In new findings by analyst Nielsen, US budget ‘dollar stores’ were found to have outgrown other consumer packaged goods retailers by increasingly attracting both low and higher income shoppers in 2008.

According to the study, consumers said to be on higher-level incomes – above $100,000 (€73,400)​ - were spending 18 per cent more at dollar stores during the final half of 2008 than over the same period the previous year.​Candy, snacks and cookies dominated the types of food products being bought, according to the report.

Downturn demand

Amidst the current economic downturn, both multinational and smaller confectioners have been looking to innovate their products to meet consumer interest in more ‘indulgent’ and even functional products, while balancing costs.

Nielsen suggests that rather than hindering product innovation, the apparent switch of respondents to more budget goods may drive greater competition between branded and private label manufacturers to balance the needs of both higher and lower earning consumers.

Although dollar stores are increasingly offering goods at higher prices than is suggested by their name, Nielsen suggests retailers in the segment are already providing greater value and consistency in their brand selections.

“Originally taking their name from the fact that most products were priced at or below one dollar, today’s dollar stores offer products at a variety of price ranges, with an average of only 23 per cent of products at or below the one dollar price point,”​ states the report.

As a result of this seeming shift in consumer preference, the report estimates that 65 million US shoppers spent money at dollar stores across the country in 2008.

Despite a growing number of higher earning consumers visiting these stores, shoppers earning over $100,000 dollars represented only eight per cent of sales in the segment, states Nielsen.

Lower income consumers, who are classed as earning below $30,000 (€22,000)​ in the report, account for 45 per cent of dollar store sales, with the remaining 45 per cent attribute to middle tier households, says Nielsen.

“The troubled economy and rising costs in healthcare, education, and food have caused everyone -- even those with high incomes -- to rethink where they purchase basic household goods,”​ says Jeff Gregori, vice president of retail services for the analyst.

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