Dollar General is luring in more higher-income households as shoppers tighten their spending amid growing concerns around the economy.
CEO Todd Vasos told analysts during the company’s first-quarter earnings call on Tuesday that new customers this year are shopping more often and spending more per visit compared with new customers last year.
They are also allocating more of their spending to discretionary categories.
“We believe these behaviors suggest that we are continuing to attract higher-income customers who are looking to maximize value while still shopping for items they want and need,” Vasos said.
The company has seen more middle- and higher-income earners.
During the three-month period ending in May, the company saw the highest percentage of these customers that it’s seen in the last four years, according to Vasos.
“We are pleased to see this growth with a wide range of customers and are excited about our ongoing opportunity to grow share with them,” Vasos said.
However, Vasos acknowledged that the company’s core customer remains financially constrained.
About 60% of them admitted in a recent survey that they felt the need to sacrifice some necessities in the coming year.
Arun Sundaram, equity analyst at CFRA Research, told FOX Business that there are more higher-income households shopping at discounters, including dollar stores, mass merchandisers and club stores, in part because of “growing price sensitivity amid persistent inflation and broader economic uncertainty.”
While economic pressure is a factor, Sundaram said that “retailers are also actively positioning themselves to appeal to a broader income base.”
“Dollar General is expanding its partnership with DoorDash, which supports higher-income household penetration through delivery convenience,” Sundaram said.
“Dollar Tree is also attracting more affluent shoppers by rolling out its multi-price point strategy to more stores, including introducing more discretionary items at $3 and $5 price points.”
He also cited Walmart’s robust subscription program, Walmart+, as an example, saying it “aligns well with its rapidly growing e-commerce business.”
Walmart has also continued to gain higher earners in back-to-back quarters.