The best-run dollar stores (Dollar General and Family Dollar) aren’t going away anytime soon. But it’s likely that their store-for-store sales growth will slow as post-recession shoppers start “trading up” to Walmart. It’s also likely that their rapid store expansion will cause some cannibalization of their own comp-store sales.
A bigger concern is the dollar stores’ increased focus on food and consumables during the last few years. Margins are tight in these categories, and the competition is intense — not only from the discounters but also from rapidly growing chains like ALDI.