One Would Think Low-Cost Stores Would Know How to Adapt During Poor Economic Times . . .

Apparently, the larger WalMarts, Target, etc. know how to do so. The lower cost rivals(?) which should have greater appeal to its targeted customers are struggling.

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Dollar General and Dollar Tree need a ‘new playbook‘ to compete . . .

In the world of retail, Walmart, Target, and Costco continue to thrive with their blend of quality and convenience. Low-cost rivals Dollar Tree and Dollar General face declining consumer interest and market challenges.

Recent earnings reveal “macro pressures on consumer spending” are significantly impacting these discount chains. Once celebrated as budget havens, Dollar Tree and Dollar General are facing the task of reinventing themselves to regain their place in shoppers’ hearts and wallets.

To navigate these turbulent times, Daniel Gielchinsky, founder of law firm DGIM Law, suggests a crucial strategic shift. Gielchinsky told Quartz.

“Dollar Tree and Dollar General need to increase their focus on consumables such as basic household needs like bread, milk, and eggs.”

Adapting product lines and offerings to meet the essential needs of their primary customer base to help them better align their lower income with current economic realities. It should not come as a surprise, Dollar Tree and Dollar General target customers who can not afford to shop at upscale stores. So why not appeal more to your customer base?

Reilly Newman, the founder of marketing services studio Motif Brands . . .

The impact of market shifts is significant for dollar stores “because low prices is all these brands have to offer.”

Newman argues that while the dollar-based strategy may work under normal conditions, the strategy falls short during periods of inflation and financial strain. Such pressures are less pronounced for larger retailers catering to middle- and higher-income customers, he added.

Mike Debner, the vice president executive advisor at Medallia, a software company, said that dollar stores can benefit from their smaller, more numerous locations, partly because they offer greater accessibility.

“It means customers can get to and out of these stores faster,” he said, pointing to Aldi as successful example of a chain that has leveraged its convenience and low prices against big-box retailers.

However, Debner argues that dollar stores lag in digital convenience. In today’s market, “robust digital services are essential.” Big retailers “excel in offering seamless online to offline transactions, such as buy online, pick up in-store, or delivery,” he added.

To address these challenges and revitalize their market presence, Dollar Tree and Dollar General must be willing to adapt to a new playbook, said Tina Wells, CEO of marketing firm Buzz Marketing Group. Adding . . .

“They need to make the necessary operational shifts, expand affordable and quality offerings, and enhance the customer experience both in-store and online,” Wells said. When they do, they need to “make consumers aware of their changes.”

QUARTZ