Dollar General lowers prices (and a simple explanation)

In a recent RetailWire discussion, most panelists agreed with me that Dollar General is lowering prices for pretty basic reasons of capturing market share and driving store traffic. The thought that “fiscal cliff” coverage is upsetting their consumer is, frankly, a stretch. Here’s my opinion:

First, I don’t believe that constant coverage of “the fiscal cliff” on the cable news and business channels has a strong impact on the shopping behavior of dollar-store consumers. It’s generally agreed that any increases in tax revenue are going to come from higher tax brackets, closed loopholes and fewer deductions — whenever such an agreement is reached. (And the separate discussion about luxury retail suggests that these expectations are already “baked into” the behavior of higher-end shoppers and the equity market.)

So there is a simpler explanation: It’s more likely that Dollar General is lowering prices in response to its discount and other dollar-store competition, and in an effort to drive traffic and market share before the holidays.

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