Dollar Tree and Dollar General have a secret weapon for keeping their prices so low

Dollar General and Dollar Tree each use private labels to help keep prices low.

Some of Dollar General's brands include Clover Valley food ...

... DG Home ...

... DG Health ...

... and True Living.

Dollar Tree's brands aren't as obvious.

Some products, like Apple Bits and Fruit Rings, seem like they would be Dollar Tree's version of Apple Jacks and Fruit Loops. But the cereals are actually from Golden Brands, which does not appear to be owned by Dollar Tree.

But many of Dollar Tree's products actually are private-label products. For example, beauty products from Sassy + Chic are distributed by Greenbrier International Inc., which is a subsidiary of Dollar Tree.

Supreme Tradition spices are also distributed by Greenbrier International Inc.

At Dollar General, private-label products often cost half the price of the name-brand equivalent. For example, a 32oz. soap from Dial cost $6.50, and a similar 32oz. soap from Dollar General's DG Body line cost only $3.50.

At Dollar Tree, all products cost $1 or less, regardless of the brand. But the company saves money by selling so many private-label products.

Retailers are now "more willing to invest in 'store brands'" because the stigma of "generic" goods has lifted, Barclays analysts wrote in a 2017 note.

Source: Business Insider

Consumers are increasingly apathetic to brands, creating what the Barclays analysts called a "sphere of despair" for food brands like Mondelez and Nestle and consumer conglomerates like Unilever and Procter & Gamble.

The unique offerings at dollar stores also provide a hedge against big competitors like Amazon.

Due to the cost of shipping, it's not economical for e-commerce companies to compete with dollar stores on items costing less than $10, which accounts for almost all private dollar-store brands.

By selling private brands instead of name brands, dollar stores like Dollar Tree and Dollar General are able to keep prices low.