Buyer Beware

Most of us probably don’t bother thinking about it, and just assume that prices are cheaper at dollar stores.

But that is not always the case, according to a study by The Guardian.

For example, a 4.5 ounce box of raisins costs $1.00 at a dollar store, but a 72-ounce box at a big box store costs $10.50. That works out to be 22 cents per ounce at a dollar store versus 15 cents per ounce at the big box store.

Cartons of milk at a dollar store are only 16 ounces – which prorates to $8 per gallon, more than what you would pay for even top-of-the line milk at Whole Foods.

Professor John Strong, a dollar-store expert at the College of William & Mary, notes, “If you’re budget-constrained, then you make choices that are not optimal.”

Despite this pricing discrepancies, Strong points out that dollar stores are often well-received in the neighborhoods they move into. Dollar stores are still cheaper for locals than the liquor shops and convenience stores they compete with. They are the least bad option. And, with vegetables, milk, eggs and meat, they’re often what passes for an oasis in the food desert. The study did find that some items are indeed more economical at dollar stores: toys, greeting cards, hangers.

Dollar Tree’s co-founder Macon Brock notes, “When a customer walked into our store, she could shut off her brain. She didn’t have to think, didn’t have to calculate how much she was spending. All she had to do was count – ‘One, two, three, four, five, six. I have six items and I have six dollars. I can buy this.’”

I think that may very well be the case; people going into dollar stores, while not “shutting off their brains”, are likely not doing the sort of calculation noted above, and are likely assuming that they are paying the cheapest price available.

Unfortunately, as seen here, that is not always the case. And many times, the ability to take advantage of the lower prices offered by big box stores requires a way to get to such stores, transportation that is not always available to lower income individuals. So it’s no surprise that dollar stores are welcomed into lower income neighborhoods.

Dollar stores are one of the few bright spots in the brick and mortar retail space, and Strong believes that since we have so many people who are pretty close to the line in trying to get by, dollar stores will be part of the landscape.

And if that’s the case, it’s important that buyers beware, or perhaps more appropriately, BEcome aWARE.

 

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