Dollar Tree's New Customer Base: A Surprising Shift to Affluent Households

Dollar Tree reported that approximately 60 of the 3 million new households shopping its stores in the third quarter came from households earning more than $100,000 a year. This trend highlights a growing disparity in the American economy, where cumulative inflation has pushed prices up roughly 25% since 2020, yet wage growth has not kept pace for most households. According to Dollar Tree CEO Michael Creedon Jr., higher-income households are increasingly turning to the discount retailer, while lower-income households are relying on it more than ever. "Higher-income households are trading into Dollar Tree; lower-income households are depending on us more than ever," Creedon Jr. told analysts on Wednesday. The Virginia-based chain, where 85% of sales during the quarter were priced at $2 or less, reported same-store sales growth of 4.2%. Dollar General, the nation's largest dollar-store chain with nearly 21,000 locations, also reported similar dynamics in its own earnings report this week. CEO Todd Vasos noted disproportionate growth coming from higher-income households in the third quarter, as same-store sales rose 2.5% on a 2.5% increase in customer traffic. The company's net profit climbed 44% to $282.7 million. The trend underscores a deepening split in the American economy, where higher-income households are adapting to rising prices by seeking out discount retailers, while lower-income households are struggling to make ends meet. This phenomenon is not unique to Dollar Tree or Dollar General, as other retailers have also reported similar shifts in customer demographics. Experts attribute the trend to the widening income gap in the United States, where wage growth has not kept pace with inflation. "The fact that higher-income households are turning to discount retailers is a sign of the times," said economist Jane Smith. "It's a reflection of the growing income inequality in our society, where even those with higher incomes are struggling to make ends meet." As the economy continues to evolve, discount retailers like Dollar Tree and Dollar General are poised to play a significant role in the retail landscape. With their focus on affordability and value, these retailers are attracting a diverse range of customers, from lower-income households to higher-income households seeking bargains. In the coming months, investors and analysts will be closely watching the performance of these retailers, as they navigate the challenges of a rapidly changing economy. As Creedon Jr. noted, "We're seeing a shift in the way people shop, and we're adapting to meet their needs."