Is $5 The New $1? Dollar General Might Find Out

Dollars don’t grow on trees, but one of the latest names in on-trend retail may provide a general idea of where they can grow.

Popshelf, the bold and trendy “dollar-near” concept by value retailer Dollar General, is growing at a rate faster than inflation. The (mostly) $5-and-below chain, which targets higher-income, suburban shoppers and takes on popular specialty store Five Below, opened its 100th store in early November, the second anniversary of its launch. In the next three years, Popshelf expects to grow that figure 10-fold.

With such rapid growth, could Popshelf be poised to shake up several generations of retail tradition? It’s reasonable to expect that its success, especially following that of Five Below, will encourage other dollar chains to launch competing formats, and create a new, pricier generation.

Sure enough, they’ve been doing just that. Dollar stores, including Dollar General, have been diming-up their $1 price tags for some time.

A Ten-Cent Tour Of Dollar Store History

Dollar General traces its heritage to 1939 as a wholesale dry goods business called J.L. Turner and Son . In 1955, it converted to Dollar General, where nothing cost more than $1.

Soon, the rivals emerged. Family Dollar opened in 1959, offering everything for less than $2. In the 1960s, 99 Cents Only Stores opened. And in 1986, Only $1.00 – today’s Dollar Tree – entered. Its roots trace?back to 1953 , however, when it was a Ben Franklin variety store.

Despite the competition, Dollar General has remained the largest “dollar” chain, with 2021 revenue of $34.2 billion and nearly 18,600 stores. It is, in fact, the third-largest of any chain in the U.S., behind Subway and Yum! Brands, according to the trade pub Dollar Store Reviewer .

Coming in second on the dollar-chain front: Dollar Tree, which in 2015 acquired the now widely priced Family Dollar. The combined company counts more than 16,200 stores and $26.3 billion in 2021 sales.

Importantly, none of these chains are dedicated to carrying only $1 goods any longer. Dollar Tree was in fact the last holdout.

From Five Quarters To Five Dollars: Enter Popshelf

In 2022, Dollar Tree hiked all of its prices to $1.25. This is where Popshelf’s influence may be evident. Dollar Tree said its new, across-the-board price point was not the result of inflation, but rather part of a strategy to offer a wider variety of goods , MarketWatch reported. These goods could be more niched, appealing to new market segments.

Dollar General may have influenced its lead rival in other ways, as well. In 2003, it introduced Dollar General Market, which carries perishable items like dairy and produce. By 2021 Dollar General sold fresh produce at 1,300 locations, and said it would add the category to 10,000 additional stores .

Also in 2021, Family Dollar (Dollar Tree) began selling produce and frozen meats at nearly 100 locations, CNN reported.

In 2020, when Dollar General opened Popshelf, Dollar Tree was not far behind. Popshelf carries a rotating selection of household decor, fashion, pet, crafts and beauty items priced mostly at $5 and below. And while geared toward younger shoppers, its appeal crosses generations: “I walked in to pretty soaps and smell goods and ‘capture your eye décor,’ ” blogger (and grandmother) Sonya Kay wrote in “Less Hustle, More Coffee.” “It’ll become a regular stop. It’s what I call a ‘Happy Shop.’ ”

Meanwhile, on TikTok, younger Popshelf fan Mercedes Mitchell informs viewers: “The aesthetics of this place was dope.” And on Facebook, one Popshelf endorser explained, “With this economy we need all the help we can get and Pop Shelf [sic] delivers.”

Dollar Tree wants to deliver, too. By 2021, it began expanding its own higher-priced concept, called “Dollar Tree Plus .” This in-store section, like Popshelf, offers goods, such as home décor and crafts for $1, $3 and $5. In November, Dollar Tree said it had expanded the multi-priced concept to an additional 1,686 stores.

So far, the slightly higher-priced concept has legs. Dollar General has expanded Popshelf to nine states and expects to operate nearly 1,000 locations by the end of fiscal 2025 , according to CNBC.

Dollar Tree, meanwhile, also is expanding a combo-store format with Family Dollar, a side-by-side destination that provides easy access to both store selections and their varying price tags. Dollar Tree plans to add 400 combo stores in 2022, for a total of nearly 650, according to Progressive Grocer.

Putting A Price On Preference

Varied concepts with higher prices require attention to new markets and preferences, and these can be different from what we’re used to with traditional dollar stores. Popshelf, for example, aims to “make every day special,” offer “stress-free shopping” and carry goods “that make living better.”

Such touchy-feely terms suggest that Dollar General recognizes its competitors are not merely other dollar stores, that the same people who grab paper towels at its nameplates might get their shoes at Nordstrom and their mascara at Ulta. This is a big reason these upward-moving strategies have the potential to make lots of dollars.

And why these three practices by Dollar General and others make sense.

1. They spot opportunities among the core. People who shop dollar stores live in urban areas, but also rural areas. People who shop dollar stores have tight budgets, but also are middle income and wealthy. In short, dollar store shoppers can be anyone, any time. In September, Dollar General CEO Todd Vasos told CNN Business that his chain was attracting shoppers earning $100,000 a year . This is due to inflation, but an analysis of shopper data will reveal ways to keep those shoppers.
2. They’re taking advantage of brand integration. Like Family Dollar and Dollar Tree, Dollar General is installing Popshelf into its existing “Market” stores where it makes financial sense. Of its 100 Popshelf locations, nearly 30 are located within Dollar General markets, combining their offerings. It plans to build 40 more such combo formats by the end of the fiscal year.
3. They bring value beyond price. Dollar General may long retain its traditional base of dollar-shoppers, but it appears to understand that if it raises prices, it should offer more than merchandise in return. In 2022, after expanding its offerings of healthcare goods, the chain established a healthcare advisory panel . In announcing its healthcare strategy, Dollar General said it?“recognizes the unique access it provides to rural communities often underserved by other retailers.”

Where Do Dollars Grow? Apparently, Anywhere.

The passage the dollar chains are taking toward trendier, higher-cost goods might signal a transformation of the traditional dollar model, but it doesn’t have to alienate its neediest shoppers. In fact, store categories dedicated to $1 items could be more actively sought out for necessity as well as treasure. In fact, Dollar General in September said it intended to expand its $1 selection , according to RetailWire.

In the end, the success of the $1 format does not rely on growing sales, but on cultivating relevance. And that, dollar for dollar, is a greater determinant of worth.