Insight Flash: Leveraging CE Data to Understand Dollar Stores’ Growth Among Higher Income Shoppers

During their 3Q23 earnings call, DLTR’s management cited growth among higher income shoppers. CE data shows that DLTR’S Dollar Tree banner derives nearly 30% of its revenue from shoppers with incomes over $100,000, second only to Five Below which derives about 35% of its revenue from this cohort. Similarly, its Family Dollar banner is growing at about 11% for shoppers with incomes above $150,000. Meanwhile, Chinese discount retailer Temu is growing exponentially across all income cohorts, and already derives more revenue from shoppers with incomes above $100,000 than shoppers with incomes between $60,000-100,000. 

CE Transaction data was quite predictive across several dollar store names for 3Q23. As results from the holiday shopping period begin to take shape, investors can utilize Consumer Edge cohort data to analyze shopper behavior. In addition to helping investors forecast company-reported sales growth, CE transaction data is leveraged by our corporate clients to gain timely insight into the competitive landscape across consumer industries. In today’s report, we highlight the utility of CE data for dollar stores.

Dollar Tree Shopper Spend by Income

In its Q3 earnings call, Dollar Tree’s management noted they are attracting customers across income levels, with most new customers coming from higher-income cohorts. Leveraging CE Cohort data, we can see that DLTR’s Dollar Tree banner derives nearly 30% of its revenue from shoppers who earn over $100,000, which is about 10% greater than the industry average. This is the second highest compared to other discount retailers, trailing only FIVE which derives nearly 35% of its revenue from shoppers earning over $100,000.  Meanwhile, Chinese retailer Temu also appears to also be making its mark among higher income shoppers, with the company deriving more of its revenue from shoppers that make above $100,000 than shoppers making between $60,000-100,000.  

Dollar Tree Revenue Growth by Income

When looking at revenue growth by income, DLTR’s Family Dollar banner had the highest revenue growth among the highest income shoppers, (excluding Temu), growing at roughly 11% for shoppers who earn over $150,000, albeit off of a lower base. This may indicate that shoppers are continuing to trade down as they look for bargain deals.

Impact of Temu on Discount Retailers

Despite this promising trend for discount retailers, it remains to be seen what effect new entrant Temu has on the industry, as the company experienced exponential spend growth across all income cohorts. 

As shoppers continue to trade-down, clients can utilize CE cohort tools to monitor its effects on different retail banners and income cohorts in real-time.

Consumer Edge is the leading provider of alternative data for consumer spending behavior, and the only provider of global revenue signals. If you’d like to benefit from using Transact US or other products for dollar stores and other industry data year-round to track trends and dynamics like these, reach out to insights@consumeredge.com.

About the Authors

Michael Gunther is the VP Head of Insights for the CEIC.
Explore more of his insights here and follow him on LinkedIn.

Harsh Masher is an Insights Analyst for the CEIC.
Explore more insights here.