Riding the Dollar Store Wave in a Perfect Storm


As evidenced by the recent downgrade of U.S. debt by S&P, consumers remain fearful of most all economic indicators. At the top of  the list for many consumers is employment and household spending. Accordingly, the chances of the U.S. economy slipping into another recession has risen significantly, and forecasts for economic growth and job gains over the next year have been substantially downsized. Many economists predict the jobless rate will fall painfully slowly, dipping to 8.8% in 12 months, not much below today’s 9.1%. According to Thomson Reuters/University of Michigan survey, the U.S. consumer confidence in early August sank to its lowest since 1980.

So with relatively modest economic growth, consumer-generated growth is becoming increasingly defensive. Because employment is a primary driver of consumer confidence, many consumers remain cautious as folks forgo luxury items and instead seek out value-oriented purchases. This sluggish consumer confidence behavior has prompted a “perfect storm” for the leading discount category known as the “dollar stores.”


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