I recently read an article in the New York Times which talked about the success of the Dollar-Store in today’s economy. Before the market meltdown in 2008, conventional wisdom suggested that dollar-stores were mainly shopped at by poor people. While 42% of the shoppers at these stores are low-wage earners, and do make up their core constituency, recent growth in the market is from affluent households. This shift in the type of customer attracted to these stores has caused designers to start to rethink the way they are creating the store layout.
Current developments suggest that a larger shift in the American consumer market is under way. The article suggests that financial instability in the market has created a feeling of anxiety within consumers; although affluent households have money now, they feel as though they might not in the future. While this seems to go without saying, the article suggests that part of the reason for the new segment of shoppers is the fear-induced pleasure in selective bargain-hunting they experience at a dollar-store.
Traditionally, dollar-stores have been designed in a way that facilitates the idea of bargain –hunting through the layout the stores. Typically when customers walk in the store cash registers are on the left and all the displayed that bombard you upon entrance, force the customer to go to the right and get right to shopping. The idea behind this is to get customers in a set routine of going down all the aisles and possibly finding something that they forgot they needed. And this is easy to do considering all of the displays in the aisle are packed with merchandise which is often piled on the ground and all the way to the ceiling. This is done to create the sense that everything in the store has just arrived and you are getting it first. The aisles were even designed to be just big enough to fit two small carts side-by-side to give the impression that the customer is getting lots of product for a little price.
Nowadays, with growth in the affluent buyer segment, dollar-stores are beginning to rethink the way the stores are designed and laid out. Many large chain dollar-stores are moving towards a uniformity in their design to take out the hunt and gather feel of the old layout. Research has indicated that much of the growth within the affluent buyer segment consists of “fill-in trips” to the dollar-store rather than going to a Target or Wal-Mart where they can get lost in the expanse of the store. To make these trips easier and allow customers to get what they are looking for and get out; many stores are opening up the front of the store rather than herding people as they did before. Aisles now are going to appropriately spaced to allow for quick in-and-out. They are also grouping the products together to make sense to the mission-oriented-buyer.
Chad Lovin
Chad Lovin
I like this idea of forcing big box retailers to rethink their competitive strategy. Their proposition is one of every day low price but the non-monetary cost is typically in location (Wal-Mart) is on the outskirts of town. Dollar-stores often times have better locations more suited to service their core customers in their location; a more urban setting.
ReplyDeleteI would compare this shift similar to what you see in the PennyMarkts of Europe in which you can get your daily essentials quickly and conveniently and then on the weekends head out to the giant Ikea.
The best implication here in this shift in the offerings and success of low cost retailers is in the potential implications for servicing the lowest income brackets. Often there exists in cities a "food desert" in which the neighborhoods with the lowest income families have no grocery stores servicing them. These same families often times are relegated to public transport and or bipedal shoe leather as their mode of transportation. What this translates to is low income families having to shop at convenience stores (i.e. gas stations) because they are the only thing in reasonable distance which then compounds the issues surrounding poor diet. Perhaps the success of these types of stores will spur their development in more low end neighborhoods thereby providing a healthy oasis to an otherwise arid climate.
I see this as a smart move because a point of frsutration with the big box stores is that although they have it organized under one roof, the store fronts are huge. Having organization at dollar store almost makes it a convenience store meets Wal Mart - which is something definitely missing the low cost segment. I think the in-and-out model, with uniformity in a small store front, is extremely appealing to busy, working adults who want to save money and not take their entire Saturday or Sunday doing it.
ReplyDeleteTo take each of these comments one step further (or back depending on how you look at it), in addition to the dollar store's appealing design and convienent locales, I feel that this format's increased traffic is indicative to an overarching consumer trend: the overabundance of choice in many consumer goods categories has reached the point of diminishing returns. An unparalleled breadth and depth in dozens of product categories, generally carried in many big box stores, has discouraged many consumers from entering such premises when faced with any type of time constraint. In years to come I believe that we will begin to see a gradual consolidation of many categories as consumers begin to weigh ease of choice over dozens of similar products with suddle, hard to distinguish differences.
ReplyDeletenice post and great, thoughtful comments that followed.
ReplyDeleteThis is a great post! I was hoping that the class we are taking would touch on this type of decision making. What a great read!
ReplyDeleteI think their positioning is great. The need to service customers that are not looking for the "experience" of a Wal-mart, but want the lower prices has a huge potential. I know I fall into that block.
I have read that consumers spend way more than intended every time they enter a big box stare--as more folks become aware of the 'hidden savings' the more popular I believe these stores will become.
Tim Smith