Dollar stores: Winning the race to the bottom?

Here’s a brief comment from a recent RetailWire discussion about dollar stores. The question put to panelists is whether dollar stores should upgrade their store design and amenities, in order to sell more higher-margin categories like apparel vs. the commodities that they are known for. I argue that it can be done, but I question whether it’s a smart idea:

Through years of effective marketing, merchandising and store design, many retailers once considered “bottom feeders” have undergone a perception change. Discounters like Target (and even Walmart), off-pricers like TJMaxx and outlet malls have given more affluent customers “permission” to cross-shop these channels.

The question facing dollar stores is whether they are interested in these kinds of strategies, or whether they risk losing the clear brand position attracting the most value-oriented customers in the first place.