The mad dash to the dollar shop

Although sticky summer temperatures linger, the realities of fall semester are creeping up on Sarah McManus of Salem, Mass. Soon, the Boston University senior will move out of a dorm and into an apartment on Beacon Street in Boston with a few of her friends.

So she drove to the Target in nearby Danvers in search of cheap, chic kitchen items and living-room decorations. But after browsing for several minutes, Ms. McManus left empty-handed and walked next door.

"I was at Target and everything is overpriced there, so I came here to see if things were any cheaper," she said, pointing to the Dollar Tree sign above her.

Target? Overpriced? Welcome to the age of the dollar store. These shops don't just stock dented cans of tomato paste, cracked sno-globes, or Christmas cookies in July anymore. They're quickly shedding their dingy reputation and attracting a legion of younger, more affluent shoppers like McManus by stocking more name brands - Crest, Brawny, Revlon, etc. - and invading the suburbs.

As the nation's economic woes persist and thrift becomes more fashionable, the dollar-store stigma is vanishing: Half of Americans who earn more than $100,000 a year have shopped at a dollar store, according to a WSL Strategic Retail survey. In addition, 43 percent of all Americans shop at dollar stores more than once a month.

To satisfy this hunger for bargains, the two biggest dollar store chains in the United States - Dollar General and Family Dollar - are breaking ground on new stores this year at a clip of more than one each day. These two companies operate more than 10,000 stores nationwide, nearly twice as many as six years ago, according Retail Forward, a market research firm in Columbus, Ohio.

The dollar-store boom represents a fundamental shift in the way American's shop, say retailing experts. They are snatching business from grocery and drug stores, and are nipping at the heels of other discounters, including Wal-Mart. Last year, consumers made more trips to the dollar store and fewer to the grocery store than in 2000, according to market researcher ACNielson.

"They're doing better than Wal-Mart and Target at attracting more and more new customers," says Michael Baker, a retailing analyst at Deutsche Bank in Boston. "They've gotten bigger and bigger, and become serious retail players."

Wal-Mart and supermarkets like Kroger and A&P have recently jumped on bandwagon by installing "dollar" sections in some stores.

Dollar stores began sprouting up after World War II in poor, rural towns that lacked grocery and variety stores. For decades, they were primarily a Southern phenomenon, slowly working their way from small towns to big cities, including Atlanta and Miami.

Then in the 1990s, dollar stores began rapidly expanding their geographic and socioeconomic reach by buying up vacant spaces in suburban strip malls across the country, explains Sandra Skrovan, the author of Retail Forward's dollar-store study. The definition of a dollar store is flexible - some like Dollar Tree sell every item for $1, while others like Dollar General and Family Dollar sell $5 and $10 items as well.

The pricing strategy also resonates with shoppers' desire for a simple shopping experience. "Finding something unexpected or stumbling on a bargain becomes a form of entertainment," says Michael Solomon, a professor of consumer behavior at Auburn University in Alabama.

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