Discount stores’ net sales rise during pandemic

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The pandemic has helped Americans appreciate the value in a dollar — and a dollar store.

According to a third quarter report by Colliers International South Carolina, activity at discount stores is intensifying during the pandemic as consumers look to buy goods at cheaper rates close to home.

“What we’re seeing is discount stores are the big winners in the pandemic,” Colliers of Charleston Brokerage Associate Patrick Nealon said. “Dollar General’s net sales for 2020 quarter three are up 25% year over year, and that’s huge.”

Dollar Tree and Family Dollar, owned by the same company, have both seen a 10% year-over-year increase.

While Five Below, a chain that sells books, clothes and more under $5, only saw a small rise in its overall sales, it opened 62 locations in 2020 and will continue to open more, Nealon said. The company, which has a location at Mount Pleasant’s Wando Crossing, came into the pandemic well capitalized and Nealon thinks it will come out unscathed by the economy’s downturn.

For the third quarter, the three largest lease transactions in Charleston, according to Colliers, were two grocery stores — a Lowes Foods on Ashley River Road and an Earth Fare on Folly Road — and the Dollar General at 3886 Savannah Highway on Johns Island.

Nealon said that shoppers were drawn to discount stores to save money during the recession, and also because these shops are typically located near residential areas.

“During the pandemic, while people are working from home, it’s easier to pop in to a dollar store and pick up smaller things if you’re in a hurry,” Nealon said. “Also, for those who have larger concerns during the pandemic, the smaller footprint of a discount store makes it easier to get in and get out without unnecessary exposure.”

Stores like Big Lots, which saw its stocks surge 60% this year, Nealon said, also have been able to capitalize on the essential goods demand because they diversify their products. Unlike other stores that temporarily closed their doors, Big Lots had the further advantage of being able to stay open during the pandemic.

As homebound folks looked for projects to spruce up their home, they found they could go to Big Lots and buy mattresses, kitchen ware, home decor — and then pick up essentials all in one stop.

Nealon noted that not all discount stores fared as well. TJ Maxx and Marshalls’ sales fell off significantly during the pandemic.

“They too went into the pandemic well capitalized so they were able to keep up with operating expenses and stay afloat, unlike companies like J.C. Penney who went bankrupt,” he said. “But historically when they had the largest growth was the year following the recession. They do their best business during a down-turned economy so they’re looking to bounce back in 2021.”

A primary problem for TJ Maxx and Marshalls was supply chain delays. For anyone who walked into either establishment during the pandemic, shelves were bare in the beginning, and not because of frantic shopping sprees. The chains had a hard time getting in shipments and even shut down their websites temporarily.

“Post-pandemic you have the bargain hunters and people looking for deals because of the recession, but during the pandemic, anywhere that was open and selling essential goods did well,” Nealon said. “Walmart, Target and dollar stores all sell items at a cheaper rate and are more convenient.”