3 Reasons Dollar Stores Are A Huge Threat To Supermarkets

Chains like Family Dollar, Dollar General, and Dollar Tree are expanding their food offerings, reports Venessa Wong at Bloomberg Businessweek.

The strategy is working, and the number of dollar stores is growing faster than traditional grocers and mass-market retailers.

Here are a few reasons why the dollar stores are a big threat to more-traditional grocery chains like Giant Eagle, Safeway, Wal-Mart, and Kroger.

Name-brand products. Family Dollar ramped up its food operations last year and started selling DiGiorno Pizza, Eggo Waffles, and Stouffer's Lasagna, Businessweek reported at the time. Dollar Tree also ramped up supplying staple items to customers, while Dollar General added many fresh and frozen food items to its roster. The prevalence of trusted brand names is drawing in customers who previously thought food bought at the dollar store was sketchy.

Speed. A trip to a large grocery or supercenter is a production, and it can take awhile to find what you're looking for. Dollar Stores are, on average, much smaller than traditional grocers. This means that picking up a frozen pizza for dinner is much simpler. Dollar General even puts essentials like bread, juice, and milk by the register for quick pick-up, The Wall Street Journal writes.

Value. Dollar stores have smaller locations, fewer products, and less staff than the Wal-Marts and Safeways of the world. As a result, they can afford to sell items for cheaper. Manufacturers are also changing their product offerings in order to accommodate dollar stores, selling smaller portions of items for cheap, according to Wong.