Dollar Tree’s Target Market
Knowing and understanding key trends within the dollar store market is what helps stores like Dollar Tree pinpoint the populations of certain income-levels whom are most attracted to their store.
Dollar Tree stores attract all age groups, with the highest percentages of shoppers falling into the 18-24 year old category (Scarborough). In the efforts to maintain a heightened visibility among the trade area’s population, Dollar Stores are typically located along a retail corridor that is exposed to a considerable amount of traffic. The store’s trade area generally lies in what would be known, in trade area analysis, as secondary zones. In comparison with primary and tertiary zones, secondary zones lie in an area that is generally less defensible from competition, and such is the case with Dollar Tree’s typical locations (IREM). The company maintains their competitive advantage in multiple ways in order to hold their ground in these high-traffic areas.
In analyzing key trends within the dollar store market, Mintel reported that, “Only 42% of respondents with incomes of $100K-149K shop the channel once per month or more and only 34% of those with incomes of $150K+ do so.” When compared to lower income levels, it is clear that dollar stores are more popular with the $49,900 and below demographic (in terms of household income). “59% of respondents who live in households with incomes less than $25K reported shopping the channel once per month or more and 56% of those with incomes of $25K-49.9K reported doing so.” Thus, it can be proposed that as consumer income levels increase, the desire to shop at dollar stores decreases (Mintel).
More so than any other group, dollar stores have been statistically proven to be most popular with members of the African American population. It was reported that 72% of African American respondents claimed to shop in dollar stores at least once a month. It was also offered by the Mintel report that, “In general, blacks and Hispanics tend to have a greater affinity for shopping. This factor, along with the prices offered by dollar stores and their convenient locations, drives visitations.” Of the participants in the survey, the African American population and English-speaking Hispanics were more likely than white respondents to report that they shop at dollar stores at least occasionally. (Lockwood)
In a 2009 study, conducted by Mintel Reports, 89% of Hispanics in the survey stated they shop at dollar stores at least occasionally, while it was also reported that 56% of the Hispanic population shopped in Dollar Stores once per month or more (Mintel). With such a large portion of Hispanic consumers flocking to Dollar Stores, what must also be taken into account are the means by which Dollar Tree can best communicate to the Hispanic target market. The Hispanic InsightCenter, generated by BIGInsight , offers an in-depth look at the best ways to connect with the rapidly growing, U.S. Hispanic population (Wissinger).
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