You would have to live under a rock not to have noticed the damage the recession has had on Americans, and we're cutting back on everything we can. So it should be no surprise that deep-discount retailers are having a heyday as consumers trade down to lower-cost items. But to really see why dollar stores are doing so well, look at the first chart in Morgan Housel's analysis of unemployment found here. Those who make the least are struggling the most, making it a natural that the lowest-cost retailers are picking up business.
The irony of the trend toward dollar stores is that margins can be higher at dollar stores than they are at grocery stores or discount retailers. Family Dollar, Dollar Tree, and Dollar General all have higher operating and profit margins than Wal-Mart (NYSE: WMT ) , one of the best retailers in the world ,and well below the low single-digit margins grocery stores usually have.
Dollar General shares were changing hands for $51.05 as o about 1 p.m. CDT, up about 1 percent on the day.