Dollar Tree is opening more stores in wealthier neighborhoods as it works to bring in shoppers with higher incomes who tend to spend more per trip, according to a new report by Bloomberg News.
The report found that 49% of new Dollar Tree stores opened over the past six years were placed in wealthier parts of metro areas across the country.
That is up from 41% during the six years before that. The shift shows a clear change in where the company is planting its green-and-white signs.
The share of new stores in ZIP codes with much higher incomes than the surrounding metro area also increased.
In the last six years, 19% of new locations were opened in these higher-income ZIP codes, compared to 16% in the prior six-year period.
Meanwhile, the share of stores opened in lower-income ZIP codes dropped to 14% from 20%, Yahoo reported.
Dollar stores often see more shoppers during tough economic times, when families look for ways to save money. But today, higher-income households are driving much of consumer spending. Dollar Tree appears to be going after those customers more directly.
The company said that in the most recent quarter, 60% of its new customers earned at least six figures.
About 30% came from middle-income households making between $60,000 and $100,000 a year. The rest earned under $60,000.
Dollar Tree Sees $1 More Per Visit
Even though higher-income shoppers visit less often than lower-income customers, they spend about $1 more per visit on average.
According to FoxBusiness, the company estimates that if these shoppers made just one extra trip each year, it could increase annual sales by $1 billion. For a retailer of this size, that is a meaningful boost.
Dollar Tree CEO Michael Creedon said the company now serves “an increasingly broad spectrum of shoppers, from core value-focused households to middle- and higher-income shoppers who are making deliberate choices about how and where they spend.”
He added that the data “demonstrates that Dollar Tree isn’t just for tough times or for those with limited resources.”
Creedon explained that while higher-income shoppers currently spend less per household overall, it is mostly because they do not visit as often.
“Because many of our higher income customers are still early in their relationship with Dollar Tree, their purchase frequency has significant room to grow,” he said.
Originally published on vcpost.com
