Discounters Draw In Consumers Amid Economic Weakness

Dollar Tree’s CEO said with extra unemployment benefits expiring and higher unemployment rates, it is expecting more consumers to shop at its stores. Shoppers outside a Dollar Tree store in Chicago in May.

Photo: Nam Y. Huh/Associated Press

Dollar General Corp. DG -1.35% and Dollar Tree Inc. DLTR -7.21% are aiming to draw in new consumers who are freshly scrutinizing their spending amid higher unemployment caused by the Covid-19 pandemic.

The rival discount retail chains on Thursday both reported stronger demand for their latest quarters, performances helped along by $600-a-week federal unemployment checks, a benefit that expired last month. Dollar General said comparable quarterly sales rose about 19%, while Dollar Tree, which operates Dollar Tree and Family Dollar stores, said those sales increased 7%.

The expiration of the higher federal benefit last month and delays tied to its replacement pose a challenge for the companies. But executives from both Dollar General and Dollar Tree said they are preparing to serve shoppers who are looking for deals and lower-priced merchandise during a period of economic weakness.

“We can see that we’re getting a trade-down at a pretty good clip,” Dollar General Chief Executive Todd Vasos said on a call about quarterly results. “As we continue to watch this evolve, what we see is very reminiscent of what we saw during the Great Recession.”